Imperialism and the Law of Value

It is rare that you stumble across a gem. But if you look carefully, the probability rises. A few weeks ago I came across one such gem of Marxist analysis. It does the best job I have seen of explaining clearly the principal features of imperial exploitation in the global economy today.

The analysis is found in a PhD thesis entitled ‘Imperialism & the Globalisation of Production’, written by John Smith and dated July 2010. The link to the pdf (1.5MB) that can be downloaded is:

http://www.mediafire.com/?5r339mnn4zmubq7

For me, the key contribution of the thesis is a clear conception of how the law of value developed by Marx has to be modified for imperialism today. Lenin defined imperialism as a special stage of capitalism and noted that “If it were necessary to give the briefest possible definition of imperialism we should have to say that imperialism is the monopoly stage of capitalism”. Smith shows how to understand the rise of globalised production under the domination of major corporations as a means by which the imperial powers extract value from oppressed countries.

The common argument one will find – explicitly among academics, implicitly elsewhere – is that in ‘poor countries’ wages are low because productivity is low. The implication is that there is no exploitation of poor countries by the rich ones – the latter are seen as having higher living standards based on their higher productivity. This view is compatible with some comments in Marx’s Capital, and it is a view held by many who claim to have a Marxist understanding. But it has no validity in the world economy today.

Smith shows clearly how various measures to demonstrate higher productivity in the rich countries are based on statistics that distort reality. He gives a striking and concise way to express this: GDP and other statistics that purport to measure ‘value added’ actually reflect value appropriated, not value produced. This tallies with the example I gave about the €4.95 T-shirt in my article on this blog on the ‘China price’.[1] There is much more in Smith’s thesis that is worth discovering, not least a destruction of the myths propagated by many radical critics of imperialism.

One difference I would have with Smith’s analysis is that he tends to work with the view that there is one single ‘value of labour-power’ in the world economy. This implies that the much lower wage in oppressed countries indicates a ‘super-exploitation’ of the workforce, with their wages being far below the value of labour-power (ie below the world average value).

I would agree that a vast reserve army of labour in many countries might allow capitalist companies to pay wages below the value of labour-power in oppressed countries. The extra flows of workers from the countryside into factories, etc, would allow capitalists to pay for their labour supply at rates below what is socially necessary for reproducing the existing workforce. That is besides the frequent use of direct force to raise rates of exploitation. However, I think that a concept more consistent with the theory of value under imperialism is that there are different values of labour-power worldwide, rather than there being an ‘average’ value that has any reality under imperialism.[2]

Insofar as companies move from ‘high cost labour’ areas and gravitate towards ‘cheap labour’ areas, then wages will be pressured lower in the former and higher in the latter countries. To that extent there will be an averaging process. However, the process is very prolonged and very uneven. It is also a process that is starting from a position where differences in living standards are huge.[3] It may be possible to construct an average of some kind, but if there is no mechanism to make other values move significantly towards that average – at least within 20 years! - then it will have limited use as a concept explaining imperialism today. The persistence of vast differences in living standards between countries closely corresponds to the division of the world economy between oppressor and oppressed countries, and the privileges that the former are able to extract in the world economy. This makes a more direct recognition of these differences the valid approach.

This, however, is a small difference of emphasis. Smith’s work is an original and insightful analysis of imperialism today and is well worth studying. 

Tony Norfield, 3 December 2011.

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[1] See ‘What the “China Price” really means’, 4 June 2011 on this blog. The data indicated that the labour cost of the T-shirt made in Bangladesh was roughly 10-15 cents, and the cost on arriving in Hamburg was €1.41, with the rest of the ‘value added’ made up from costs of transport, shop rent, sales and marketing costs, profits, taxes and so forth that added up to the €4.95 shop sale price. This is how the imperialist power ‘adds value’ to the product of sweated labour in the official statistics!

[2] Smith certainly recognises these differences, and he cites the immigration controls that are a principal factor keeping them in place. Control of the world economy by monopolistic capital sees many other barriers to the ‘free market’ that will result in longstanding differences in rates of return on investment, etc. This does not suspend the law of value, but shows that it operates in a different way under imperialism than when Marx was writing.

[3] For example, hourly compensation costs in manufacturing may be 10, 20 or 30 times higher in the US than in oppressed countries, see ‘What the “China Price” really means’, 4 June 2011. The charts in this article show a clear, massive divergence of wage levels between imperial and oppressed countries.