The Imperialist Globalization of Production
The debate on value transfer and unequal exchange is not new. Today, however, an increasingly large proportion of the goods the world consumes are produced in the global South. Production is not, as in the 1970s, limited to primary and simple industrial goods like oil, minerals, coffee, and toys. Rather, despite relatively low manufacturing “value added” (of which more below), virtually all types of industrial inputs and outputs are produced in the global South: these include chemicals, fabricated metal goods, machinery and electrical machinery, electronics, furniture and transport equipment to textiles, shoes, clothes, tobacco, and fuels.1 But why, and how, has this shift in the location of production happened?
|Sources: John Smith, “Imperialism and the Law of Value,”Global Discourse 2, no. 1 (2011): 20, https://globaldiscourse.files.wordpress.com. The 2010 industrial workforce data was extrapolated from 2008 sectoral distribution of workforce in the International Labor Organization’s (ILO)Key Indicators of the Labor Market (KILM), 6th edition (ILO, 2010); Economically Active Population (EAP) from the ILO’s Laborsta database, http://laborsta.ilo.org/default.html; and projection of “more developed regions” industrial workforce includes the ILO estimate of recession-induced decline. The ILO categories “More” and “Less” developed regions roughly correspond to the contemporary categories “Developed” and “Developing” economies, respectively.|
The low level of wages in the South creates not just a higher global rate of profit than would otherwise be obtained; it also affects the price of goods produced in the South. In mainstream economics, the formation of the market prices for a personal computer through the production chain could be described as a “smiling curve” for “value” (sic) added (see Chart 3).5“Value added”—which in mainstream theory is simply equivalent to the new added income measured in conventional price terms—is high in the first part of the chain, with highly paid research and development, design, and financial management located in the North, whereas the curve falls in the middle, with low-wage labor in the South producing the physical product. Value added/price rises again towards the end of the curve with branding, marketing, and sales taking place in the North, despite wages for retail workers being amongst the lowest in those countries.
The Value–Price Transformation
The Global Framework
In effect price formation on the world market is governed by the same principles that apply under a conceptually isolated capitalism. The latter anyway is merely a theoretical model; the world market, as a unity of specific national economies, is something real and concrete. Today the prices of the most important raw materials and final products are determined internationally, in the world market. We are no longer confronted by a national level of prices but a level determined on the world market.8
For Marx, as soon as a good becomes integral to the reproduction of an economic system based on exchange, the labor expended in its production becomes part of the labor required for the reproduction of the whole system and qualitatively equivalent to all other labor expended in the production of all other goods which are similarly integral to the reproduction of the economic system.9
The Core of the Apple
The Political Perspective