Unequal exchange, etc III (dependency and world-systems)

This is a translation of this text, originally in spanish. And there's a more delevoped critique on our text for the Harvey-Smith debate on imperialism.

We are going to show (or so we hope) that dependency theory is a Ricardian theory instead of a Marxist one, either in the version of Emmanuel or Prébisch (the one that will inform all the variants of dependentism: let’s remember that there is no one dependentism), and we want to show that although there is a relationship of 'dependence' between strong and weak countries, the division of the planet into imperialist, semi-imperialist (Marini) and dependent countries, typical of the 'three-world theories', hides a nationalism or economic chauvinism that also starts from that Ricardian conception. This chauvinism is still reproduced in currents such as Wallerstein's world-systems theory, by sharing the dependency matrix, and the qualification of this tendency as Ricardian complements Brenner's characterization of world-systems theory as Smithian (in the transition debate). This apparent contradiction between an accusation of smithianism and an accusation of Ricardianism will in fact cut across the different versions of dependentism of different Latin American authors, such as the difference between Marini/Bambirra and Cardoso/Serra.

First and foremost, it is necessary to recognize that there are two sources or main antecedents of dependentist theory: one is the work of Paul Baran, and the other is the theory of unequal exchange by Prébisch or Emmanuel (based on the terms of exchange as the main theoretical matrix). These two matrices (Baran and his Political economy of growth, and unequal exchange understood in the light of terms of trade) are the main antecedents and precursors of dependency. We’re not going to discuss Baran’s case: we believe that it is the aspect of dependentism that is correct; in effect there is a 'drain' of surplus value through foreign companies installed in poor countries, and through which the surplus value of a society is exploited to extract it and take it to the strongest societies in the world market. Here there is a correlative relationship between magnitudes of value extracted by the companies and magnitudes of value belonging to the exploited countries: the amount of repatriated surplus value is surplus value produced in the dependent country, and the more surplus value is extracted, the less surplus value remains within the poor or weak society.

In contrast, the unequal exchange based on the terms of trade of Prébisch or Emmanuel, although it is based on wages and productivity increase or on surplus labor internal to the production process (as it will be later in Marini, for example, and unlike Cardoso), starts from the false premise that 1) the higher price of exports implies a greater appropriation of value in the terms of trade and the lower price a smaller appropriation, 2) that the lower appropriation of value in countries with lower organic composition and low labor productivity it’s transferred through the products towards export/import with the metropolitan countries, and 3) that these two forms imply a unidirectional transfer of value from the dependent country to the exploiting country, causing a correlative movement of losses in the dependent country and gains in the metropolitan country.

The first point diametrically contradicts one of Marx's few assertions about the world market: the fact that high labor productivity makes it possible to sell at lower prices, and extract more value, ruining the competition of countries with low productivity. That is, the terms of trade of a metropolitan country could 'deteriorate' with respect to those of a dependent country (as opposed to unequal exchange), precisely because the high productivity of its productive processes makes its products cheaper and extracts more value from them. The prices of goods imported by a dependent country can very well go down, without this meaning any loss or deterioration for the metropolitan country, but on the contrary: it means a fundamental principle of Marxist economics, which is precisely the capacity to sell at prices below value, and still extract a profit above value . The identification of price and value is a shared error both by smithian economics of marginalist and neoclassical orientations, as well as by Ricardianism (remembering that, in the search for the medium-price and the relationship of the factors of production with labor-value, Ricardo yields to Smith, only at the level of productive factors, and not only in exchange or supply and demand). A country can have a ratio of 50/100 (0.5) and move to a ratio of 40/100 (0.4) with respect to a dependent country (that is, the dependent country would go from a ratio of 2 to 2.5) and constitute the purchase of the exact same quantity of products, with an even greater appropriation of value (according to its organic composition, productivity, etc), and if the supposedly dependent country decides to import more of that product equaling the previous and normal price of 50 (with a ratio of 2, due to the cheapening of its nominal price) would imply an even greater gain for the metropolitan country, even with its low nominal prices.

With respect to point 2), the equalization of the rate of profit and the appropriation of value itself based on unequal organic compositions, although correctly pointed out by Emmanuel or Marini/Bambirra in theoretical terms, is not so in empirical terms: equalization implies the competition between the productive processes including the level of the realization of goods, and there is no way that the productive processes that produce for the internal market transfer through their products to the foreign country any appropriation of value (precisely because of the fact that they do not produce for export). This means that a large part of the production processes of the different world market companies do not transfer any value through the terms of trade, even though it is based on working hours, and on the terms of trade in nominal prices converted to labor-hours, etc. , in the sense of Emmanuel. The only sectors that have contact with their production and international exchange to even make this transfer possible outside the country are the export sectors. And on top of that, and returning to the identity between price and value, the contact or transfer of products from the export sector of the peripheral country in commercial exchange with the export sector of a metropolitan country, does not imply that there is an equivalence between the nominal prices of the terms of exchange and the working hours of each country. That means that we would not be talking about a general equalization of profit, but an equalization that would only involve the export sectors of each country of the world market, which depend on their appropriation not on the nominal price of the terms of trade, but of the organic composition and productivity of the productive process of the country where they are located, making their equivalences heterogeneous and impossible. In fact, labor-hours can only be measured or expressed monetarily in three ways: as variable capital, as surplus value, or as MELT, magnitudes that are heterogeneous and do not correspond with each other, so that the nominal price of goods does not coincide in any way with the measurement of labor-hours that Emmanuel proposed (prices that would range from the constant capital actually spent, to profit, etc). Again it is a confusion of price and value, only that in the case of Emmanuel it is Ricardian (insofar as its theoretically based on labor-value), whereas in the case of Prébisch or Cardoso/Serra it is based on the Smithian supply-demand (especially in Cardoso/Serra, but also in the "profit squeeze" present in Prébisch, etc).

Finally, then, point 3): none of these forms proves neither a correlation between magnitudes where the surplus value of the dependent countries decreases in inverse relation to the increase of surplus value of the metropolitan societies, nor does it prove any transfer of value through the international trade of products. Moreover, the terms of trade do not really mean anything in relation to the appropriation of value, but the increase in the prices of products in international trade is simply beneficial insofar as it represents a simple price increase, but this does not mean or prevent price reductions from being advantageous for the extraction of a much higher value (as established by Marx). Now, this puts the world-systems theory of Wallerstein in serious difficulties: he maintains that there is a synchronicity in the world market, and at the same time, he argues that there is a division of "three worlds theory" between imperialist, semi-imperialist and dependent countries, which supposedly operates as that correlation of magnitudes where one increases in proportion of decrease in the other (which we already saw is not there, except in Baran's approach). The danger of Wallerstein's synchronicity is transhistoricity that would make it lose the essential difference of which Marx speaks in the chapter of economic method on Grundrisse, but also this synchronicity is based precisely on the dependency mechanism that we have just seen is wrong: it is based on flows or transfers of value flows that do not really work in the way that dependency proposed it (and ignores other methods of international submission between strong and weak countries, in addition to mutual advantage between bourgeoisies of large and small countries, such as is detailed here). The same reason why the approach is Ricardian is the reason why it is smithianism: it is a Ricardianism but applied to international trade instead of productive processes. It creates the illusion that the backwardness or poverty of dependent nations is outside nations, and creates the illusion that the clash of production and reproduction relations in the world market is a clash of nation-states. It is not possible for this to remain a dilemma, and that the productive processes must be put à la Brenner on the one hand, and internationalism and the external interactions of the economies on the other side based naively on trade: there must be relations of global or international production and reproduction, in which the analysis of the world or international market is already analysis of production processes. An attempt to synthesize that possibility is also found here .