The infamous Iphone example

One of the most commented and widespread examples of the so-called persistence of classical imperialism all through the XXI century, is the Iphone example. It appears in John Smith’s Imperialism in the XXI century, and ever since, is one of the most used up examples of how the West still dominates the rest of the world, whether by Marxist economists or supporters of the idea that imperialism hasn’t changed at all in more than a century. The Iphone example is basically this one: from the factory cost estimate of $237,45 from HIS Markit at the time the Iphone 7 was released in late 2016, China only earns $8,46 or 3,6% of the total. The conclusion is obvious: there’s no inversion of roles between Western and Eastern economies and societies, the Triad still predominates, and all talk about a new form of imperialism or about China taking over the US, is preposterous and obsolete; there are no new developments in the world market, and so Lenin’s theory is alright and well, and he speaks the truth even from the grave, more than a century later.

But then the troubles begin, as we can see in the original study where this data is taken from: “The other $228.99 goes elsewhere. [That is, China gets $8,46 dollars, and the other $228,99 goes outside China]. The U.S. and Japan each take a roughly $68 cut, Taiwan gets about $48, and a little under $17 goes to South Korea. And we estimate that about $283 of gross profit from the retail price – about $649 for a 32GB model when the phone debuted – goes straight to Apple’s coffers.” So the US and Apple get $68 of the factory cost price, and Taiwan, South Korea and China taken together, all get the aggregate sum of $73,46. This means that, by the very same data used by Smith and the classical position, East Asia and the Pacific (excluding Japan) actually get more from the Iphone than the USitself. The data proves the opposite of what the defenders of the classical position argue: it demonstrates how value and profits from Apple’s multinational productive processes, are flowing away into Eastern imperialism, and not to the West. And as the last part of the quote shows: from the $649 retail price, $283 of gross profit go into Apple and the West. That means $366 of gross profit, the majority of the Iphone’s retail price, goes outside of the US and Apple. Once again, the data shows the opposite of the classicist position.

Does this mean we support a radical inversion of roles between the Triad and East Asia, where the Triad is suddenly going to become just like a “Third World” country, and East Asia is going to be the new superpower who drains value and profits from the West? Of course not. Are we going to deny that China hasn’t even developed the most advanced tiers of industrialization which the Triad enjoys, like finished capital goods instead of intermediate parts and components, or instead of just industries like automobiles? Of course not. China is not some sort of “new United States” nor the new Triad. As we have already said: “… in the possible inversion between East Asia and Triad countries, we should not expect the inversion of draining, but a mutual profiting with a relatively new positioning between strong and weak countries in the world market.” Or as we explained here: “So if there’s an inversion [in expanded reproduction], it is still framed within the same patterns of an uneven world market. Concentration and centralization points are multiplying in the world market, but that’s not changing the exploitation of the most powerful economies against the weaker, just like in classical imperialism. And at the same time, it’s a new form of the same classical framework.”

To put it more bluntly: Duménil and Lévy determined in 2018 that the US and the UK together control the majority of multinational stocks: from 43,000 multinational corporations worldwide, and from 500,000 corporations and 77,000 individuals related by stocks with those multinational corporations, 737 corporations or individuals own 80% of stocks and profits, and 147 corporations or individuals linked to the US-UK cluster, own 40% of all multinational stocks and profits in the planet. In 2016 it was revealed that the top 100 billionaires owned more wealth than the poorest half of the world, but this 100 billionaires’ wealth is equal to just 3,4% market capitalization in the whole world, and the wealth of the 2,043 billionaires is just 11,4% of stock market capitalization. But as the authors themselves advert, or as we can see for ourselves in Forbes, this small faction of the international and multinational bourgeoisie, is increasingly being composed of the emergent economies’ local bourgeoisie. The latest Forbes list of billionaries also showed the same trend: emergent economies’ billionaires (specially from Asia) are increasing, while the Triad ones are decreasing, not just in the number of individual billionaires from the different regions, but the actual patrimony of income and profits they own and represent. This faction of emergent billionaires are also more frequently also managers of multinational companies, instead of just multinational dividend-earning financial owners. This means the US-UK hegemony isn’t going anywhere at all, just like in the classical imperialism position, but at the same time, there is a repositioning happening where some neo-colonial “Third World” countries, have turned into actual or increasing competitors against the classical Triad superpowers. This not only goes against dependentism, but against Three World’s Theories in general, and against the division of the world into imperialist and non-imperialist countries and states. But that doesn’t mean that it contradicts the inequalities and unevenness of the world market: there will be imperial exploitation of weaker nations by stronger ones, but just not in the same form; the Triad still has the upper hand in terms of the number of stocks it controls, and the mass of accumulation and profits which can appropriate all over the world: their multinationals are bigger and truly worldwide, while emergent multinationals are mostly regional.