Redditors gather around to cry about jason hickel's article on unequal exchange. Lot of genius scientist economists chime in to deboonk all the bad science.
Redditors gather around to cry about jason hickel's article on unequal exchange. Lot of genius scientist economists chime in to deboonk all the bad science.
Posted in r/science by u/six-sided-bear • 3,689 points and 377 comments
Some genius takes:
The whole Global North/South split is a pet peeve of mine as a social scientist working in development policy. It's a bunch of outdated garbage from the Cold War that was really just a thinly veiled dogwhistle for 'white/the good Asians' and 'not white'. It doesn't hold up to any rational examination. South Africa was part of the Global North until white rule under Apartheid ended, and now they're in the Global South. southern nations.
Real educated economist chimes in:
Jason Hickel is an anthropologist (read: not economist) and degrowther. Despite having no background and seemingly almost no understanding of economics as a field, he somehow continues to get 'economics' papers published in reputable journals despite their obvious low quality. But to anyone with a cursory understanding of economics, it should be entirely unsurprising that exports from developing nations to developed are more labor intensive than vice-versa. This is not a novel conclusion and is not 'appropriation', but is entirely explained by a concept in economics called comparative advantage.
Another genius owns the article epic style
This paper is a demonstration of why input-output (IO) models are bad for economic research. IO models were used by the soviet central planners to allocate resources. IO models are bad for research for the same reason the are bad for planning. The authors look at “embodied labor” (adjusted for human capital), the idea being that any two things produced by an hour of (human capital adjusted) labor must have the same value (btw, this “labor theory of value” goes back to Adam Smith, and was later promulgated by Marx).
Other facts that the authors’ framework will struggle to explain: why is it that the poor countries that most integrated with global trade networks became rich (s korea, Japan, Singapore) or are otherwise growing quickly (china, Panama, Vietnam)? Why is it that countries with severe barriers to trade with the global north struggle to grow (n Korea, India for second half of 20th century)? That’s very hard to explain if trade with the global north is fundamentally exploitative.
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Honestly, this is a terrible paper. Unequal exchange is not a good way of understanding the world as it is. The only real unequal exchange under Capitalism is the payment of wages for labor. (Yes, there is rent of various kinds and some other things maybe, but they are very small compared to surplus value extraction). To make it more concrete, US farmers selling corn to Mexico is not unequal exchange, even though it may take 1 hour of labor to make corn equivalent to 10 hours of labor of avocados that exchange for the same value. On the other hand if a US company employs workers in Mexico, it is exploiting them to make profit which filters back to the US without equivalent. There is of course a legitimate point to make that if the world economy were truly as open and integrated as the Neoliberals sometimes claim, these production differences should equalize. One of the big reasons production methods don't equalize is that wages are artificially suppressed in 'global south' countries. There are lots of other reasons though which would be interesting to investigate more, rather than clinging to unequal exchange theories.
edit: In fairness they do kind of acknowledge this. I think they underestimate the differences in physical production. Take India, a large part of the agriculture is not mechanized to this day, so of course it is 10-100x less productive.
It is important to note that, in cases where physical productivity differences do exist, this is often because it is more profitable for capital to use cheaper, more labour-intensive methods than to invest in modern equipment—especially in cases where state investment in technological development has been curtailed by structural adjustment programmes, or where patents prevent affordable access to necessary technologies—precisely because Southern wages are maintained at artificially low levels34,35. This arrangement benefits Northern consumers with cheaper goods and benefits Northern capital with an increased surplus. In such cases, the use of labour-intensive methods facilitates value transfer and should be understood as constituting unequal exchange. Under these conditions, the South is compelled to allocate more labour to production for international trade than would be required if technology was deployed more rationally and fairly, thus draining—and wasting—a crucial productive capacity that could otherwise be allocated toward producing goods and services necessary for local well-being and development (see Supplementary Discussion 2).
Anyone dismissing unequal exchange out of hand has clearly not done the reading. No investigation, no right to speak.
The best book I can recommend on it, is John Smith - Imperialism in the 21st century. Also Zak Cope - Divided world divided class.
People cling to pre-Marxist unequal exchange theories because they are reassuring, they are, however not true. Where is the unequal exchange happening? When India exports rice, which stage is unequal exchange? Why do those people sell the rice for less than its value? Marx explains quite clearly why surplus value extraction happens. The unequal exchange believers totally fail to do the same.
I'm way too busy today to get into this, so I hope someone else will.
Here's a good article addressing most of the "orthodox marxist" criticisms of unequal exchange, and what's wrong with them.
A huge section of the working class in the global South has been “rendered superfluous” by the inability of modern production methods to soak up enough labor to prevent rising unemployment, and this alone, even before we take into account the much harsher labor regimes prevalent in low-wage countries, exerts a powerful force that makes “the price of their labour-power fall below its value.”
This is totally incoherent. I doubt this author has ever read Marx, they certainly haven't grasped the thrust of his argument.
Slightly more systematic analysis:
Part1 is an unremarkable and outdated if largely correct collection of empirical points. Fine.
Part 2 rests largely on incorrect empirical claims.
Companies like Apple and H&M export no capital to Bangladesh and China—their iPhones and garments are produced by arm’s-length production processes. Untrue. Also if some Taiwanese company is doing the capital export, that is still imperialism as Lenin defined. This resonates powerfully with contemporary global capitalism, where imperialist transnational corporations share the spoils of super-exploitation with myriad service-providers and their own employees, and where the biggest cut of all is taken by the state.
Apple famously a highly taxed company. Also there is no evidence that Apples shares spoils with its employees, moreover there is no reason to believe they would do so and every reason to believe they wouldn't.
In general this article seems to be laundering a non-materialist argument and world model via a smattering Marx and Lenin quotes, largely without making any attempt to understanding the quotes themselves. Laundering the total rejection of Marx and Lenin via their own words by totally misunderstanding them. It really isn't worth my time to fully dissect this article, so I leave it here.****
Take India, a large part of the agriculture is not mechanized to this day, so of course it is 10-100x less productive.
Okay but even if we operate within the constraints of this framework, we have to ask some questions. Firstly, why does India not simply mechanise their agriculture while continuing to pay comparatively low wages, as such would result in higher profit than continuing to use non mechanised agriculture? Secondly, in such a case as illustrated in the first question, wouldn't a ton of agricultural production move to India to maximise profits? Lastly, given that neither of the above has happened, with the distribution of agricultural technology being what it is, and the division of labour that results from that, we have to ask if this is compatible with equal exchange?
The wages are often too low to make it cost effective to mechanize. Also, you have to keep in mind that India is not a rationally planned economy. India as a whole would enormously benefit from mechanization of agriculture, but capitalists and landowners have different interests.
I agree that intellectual property law is creating unequal exchanges, but I suspect that this is still quite a small effect relative to the total global economy. I welcome an investigation into that.
From a review of a recent book on copyright law
While the United States, they tell us, earns about $80 billion per year from licenses for its intellectual property, Afghanistan raised just $335 from licensing fees in 2020
That is a lower bound though, since they also make enormous amounts of money from using the intellectual property to not have competitors. Still is pretty small in the scale of the whole economy, I would expect.
I seem to recall a similar situation occurring with the pre Mao landlords. They had real interests in keeping productivity gains suppressed. I can't remember why exactly but filling up a persons time with survival as much as possible is a powerful counter revolutionary tool