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A key point to note is that the
discussion of these topics often mixes up the question of the value of
labour-power and that of (the rate of) exploitation. Both are affected by
social productivity – how much can be produced in an hour – but are different
aspects of labour’s employment by capital.
For example, assume that the
value of labour-power, represented by the wage, is the same everywhere. Then
the rate of exploitation – how much surplus-value compared to the value of
labour-power – is higher if some workers work more hours at the average level
of productivity. Even with the same number of hours worked, the rate of
exploitation would be higher where workers are more productive per hour than
average – usually meaning they are working more intensively, or have better
technology or have higher skills. One hour of productive social labour under
capitalism produces the same amount of value as another only if it is of
the same productivity, intensity, etc.[1]
Of course, the value of
labour-power is not the same everywhere, so that adds another variable to how
exploitation is calculated. If the value of labour-power is much lower in some
countries than others, exploitation might be more, but it might also be less,
depending upon hours worked, intensity, productivity, etc. Nevertheless, these
are abstract points of theory; the reality of the world economy paints a much
more straightforward picture.
1. Wages, value of
labour-power
Everybody knows that there are
huge disparities in living standards worldwide. Equally, every capitalist
company knows that workers in one country may get wages that are a small
fraction of those in another country. Recent data from the US Conference Board
for 2012-13 show that manufacturing hourly compensation costs (ie wages plus
various directly-paid benefits) in China and India were 11.3% and 4.5%,
respectively, of the US level, despite a previous increase, especially in
China. So, if the US worker got $25 per hour, the Chinese worker got under $3
per hour and the Indian worker still less. In the rich European countries, by
contrast, compensation levels were generally above those in the US,
although for the UK they were 20% lower, at nearly $21 per hour.
Whether one allows for the
impact of exchange rates, local costs, or anything else, it remains the case
that a large proportion of the world’s proletariat is living in penury compared
to those in the rich countries. The disparity is so huge that, even with
so-called globalisation in recent decades, there has clearly been no
‘equalisation’ of wages in the world market, nor really any significant
narrowing of differentials. For this reason, it would be wrong to argue that
there is an equal value of labour-power everywhere, so that if one group of
workers gets paid below this, then they are getting paid below ‘the’ value of
labour-power. Instead, it makes much more sense to argue that there are
different values of labour-power in different countries, for a variety of
historical, political and social reasons.
Taking absolute levels of wages
(basically, their purchasing power, or real wages), moves towards an
equalisation could potentially occur, but only if there were a free market in
labour-power. However, from the late 19th century, when travel became less
costly, there was also the growth of passport laws and immigration controls in
the richer countries. Governments implemented these not only due to concerns
about ‘undesirable aliens’. More importantly, labour unions and workers in the
richer countries protested about the pressures on the labour market for lower
wages from these migrants and the extra demand for housing, etc.
Such controls have remained in
place, in different forms, since then. Where they have been relaxed, as with
the EU membership of Eastern European countries from 2004, this has caused
political trouble, as witnessed in the latest UK Brexit vote. The ‘exit’ voters
(mostly in England and Wales) were those who felt they had suffered from an
influx of cheaper ‘Polish plumbers’, etc, who had done them out of jobs, made
housing more expensive or less available, and made the queues for medical
services and welfare payments longer. Similarly, in the US we have the ‘Trump
wall’ proposals to keep out the Mexicans, etc. These political moves,
contradicting the usual capitalist search for the lowest labour costs, are
responses of the ruling class to the economic discontent of a loyalist,
pro-imperialist working class that is demanding protection from its state.
From a Marxist perspective,
wages are based on the reproduction costs of labour-power, or what capitalists
need to pay workers to get them to be able to show up for work (not just
individually, but also to allow for family costs, etc). This, in turn, depends
on subsistence costs as a minimum, plus what Marx called a ‘historical and
moral element’. This latter element is based on the social conditions
prevailing, including the success or otherwise of working class struggle for
higher wages, benefits, etc.
This also means that there is
not necessarily any direct relationship of wages to productivity. It is true
that higher productivity can allow the capitalist to make some concessions on
wages and benefits while still making a profit. Equally, low productivity means
the capitalist will have to impose harsh conditions in order to survive in
competition. However, there is no one-to-one relationship. It depends on the
political and social situation. A defeat of the working class can lead to high
levels of exploitation and high productivity, but low wages. This was true for
the West German ‘economic miracle’ in the 1950s, for example, where
exploitation of the working class was comparable to that under Hitler.
In periods of crisis-free
growth, it is likely that wages will rise, but commonly we find that wages grow
less than productivity. The degree to which that happens is not predetermined.
Rising productivity is usually an indication of a rise in the rate of
exploitation, despite what may also be improved living standards (higher real
wages) for workers. However, this mechanism does not work in the same way for
workers in the dominating, imperialist countries and for those in a more
subordinate position.
In the imperialist countries,
the capitalist class may attack living standards, but it has far less freedom
to do so than in the dominated countries. In the latter, it is also starting
from a lower level of living standards from which to begin exploitation. In
this case, the ‘historical and moral elements’ work in capital’s interests.
Especially for countries that are newer entrants to the global economy, the
more traditional social relationships can substitute for higher wages paid by
the capitalist (eg workers from the countryside working in factories but still
growing some of their own food). Wages will be very much lower than in the
major countries, even if productivity in the factory is not that much lower, or
may even be higher, than in the more developed economies.
2. Productivity
A few points on productivity
measures in commonly used economic statistics, and the differences between
imperialist and dominated countries, are also worth bearing in mind.
The national average
productivity level in dominated countries may be low, since it will often
include a large subsistence-based agriculture or commercial sector and
small-scale producers. This can lead economists to argue that differences in
wages are a function of differences in productivity (on their assumption that
workers get rewarded according to the value of what they produce – something at
odds with a Marxist understanding). But this economist argument conveniently
ignores that foreign companies from imperialist countries invest in, or are
supplied by, companies in sectors of the economy where levels of productivity
that are not materially different from those in the major countries.
Foxconn, for example, has
greatly mechanised its massive production facilities in China with a huge
number of industrial robots. This highlights how the massive gap between wage
levels paid in China, India, etc, and the wage levels paid at home is a sign of
extra exploitation, in the sense of value produced versus the value of the wage
paid. In other words, it is a higher rate of exploitation (s/v) by these
companies in India/China, etc, not a sign that they pay low wages because
productivity is low.
I think a key point of John
Smith’s Imperialism book is to show how GDP-related statistics mean that
measures of value ‘production’ are implausibly distorted in favour of the rich
countries. With their commercial (and more general) market power, they are able
to force a deal upon the producers of the oppressed countries, although this
shows up as value accruing in their own domestic economies. This is why Apple
Inc, a US company, looks so profitable, despite producing little or nothing in
the US.
3. Profitability, rate of
profit
Differences in national rates of
exploitation may not be the reason or the only reason for the different
measured rates of profit. Tax concessions for foreign capital, or other
concessionary deals to attract foreign capital can also be important. Equally,
cheaper land or other available resources can also help boost profits,
separately from whatever wages might be paid.
This raises the question of why
‘all’ capitalist investment does not migrate to the more profitable location,
or why it has not all moved to China, etc. John Smith has made some useful
points here, both that a lot of the productive capacity has done this –
as shown in some details of FDI that distinguish HQs and more marketing-type
facilities from production facilities – and that there has been a distinction
in the product markets between more high-tech and low-tech operations. The
former are in one ‘market’, that run by the major powers making aerospace
products, top-end engineering products, etc, with patents and other barriers to
entry from competitors. The latter is a separate market making textiles,
clothing, simpler components for other products, where competition is fierce.
I would add that there is also
an extra ‘value’ given by design patents and intellectual property, plus
marketing power. More or less all of this economic benefit accrues to the
companies based in the imperialist countries. This is a form of monopolistic
control of markets, boosted by the greater buying power of rich consumers – in
this respect it is a feature of monopoly control that is self-reinforcing. One
interesting angle on this is given by the ‘Smiling Curve of Stan Shih’, where
Shih, a former Acer executive, notes that the worst thing to do if you want to
make any money is to produce the goods, rather than designing or selling
them!
This harks back to British
imperialism’s heyday, when Britain was more of a commercial and financial
operator than a producer. If anything, the pattern of the world economy today,
with the power of Google, Facebook, Amazon, etc, shows that profitability has
little to do with producing any value. Don’t be an idiot, get others to do the
hard work producing!
Such developments also cast
questions on an equalisation of profit rates internationally, as measured by
country-based rate of profit measures. Yes, companies will tend to focus on
where more profit can be made. But how do they do this, and does this mean they
change location? This is one more sign that Marx’s analysis, and even Lenin’s,
is only a starting point for analysing imperialism today.
4. Productivity, C/V, rate of
profit, imperialism
Higher productivity means
producing more use-values with less of an input of value, ie less value (social
labour-time) per unit of commodity produced. Usually, and historically, this
comes about through mechanisation. But there can be path-breaking innovations
that use up far less resources (constant and variable capital) per unit of
output (for example, in telecoms, containerisation) and might even involve much
less cost of constant capital. So, there is a very common, but not always a
necessary link between a higher C/V and higher productivity.
The point I would stress,
however, is that in much historical work on imperialism there is a mistaken
view that the basic mechanism of exploitation/value transfer is where higher
C/V countries (presumably, the more developed) extract value from lower C/V
countries (the less developed). This derives from the process Marx describes
for an equalisation of profit rates in the capitalist market, ie that there is
a flow of value (based upon prices of production differing from values) from
the low C/V companies to the high C/V companies.
The problem is that this has
nothing to do with imperialism as something special in a new phase of
capitalism! It is a normal feature of the capitalist market, even within
an imperialist country. The economic analysis of imperialism has nothing to do
with this aspect. Instead, the economic content of imperialism should show how
the more powerful countries exert economic power over the oppressed.
Furthermore, this is how a monopolistic market run by the major countries tries
to prevent whatever free-market equalisation is meant to occur, whether this is
of profitability – to protect their interests – or even of wage levels, to keep
their populations onside, when it comes to imperial conflict!
5. Conclusion: the benefits
of imperialism
In economic terms, imperialism
benefits not only the imperialist governments and corporations, but also the
mass of the populations in the powerful countries. This comes through
concessions that the former are able to give to the latter, whether in welfare
payments or in wages directly. In the major countries, even when wages and
working conditions are under pressure, or when unemployment is rising, there
remains a clear distinction between the living standards and the
state-sponsored social safety net available to workers in rich countries and
what workers in poor countries receive. These privileges are an important
material basis for the political outlook of the mass of workers in the rich
countries.
Tony Norfield, 30 July 2016
[1] Also note
that whether value is created is socially determined. For example, if too much
is produced of a particular product, then part of the social labour allocated
to its production is worthless. This will be reflected in unsold commodities
and/or falling prices.
