"Third World" industrialization and productivity growth

Husson was maybe one of the first to point out the superiority of emergent productivity since the late 90’s and early 2000’s. There needs to be a Marxist explanation for this phenomenon, which not only goes unexplained through imperialism theories, but also contradicts many other so-called Marxist positions, like dependentism refusal to believe in the possibility of advantages for the peripheries, etc. Third World industrialization is the most important phenomenon of the XXI Century. It destroys imperialist notions of an agricultural/industrial divide, it confirms the Prussian way of development or the second non-revolutionary way of chapter XX Vol. 3 (specially for the colonies), and is also way more different than primitive accumulation, making obsolete the notion of a ‘pure’ capitalism. There’s no pure capitalist form, they’re all pure or dirty, either way (just like Marx warns of using british capitalism as a universal scheme or form). Is the period of Banaji and Desai, Petras and Katz, etc: multipolarity, inter, ultra and superimperialism, etc.

Industrial production Source: World Bank Global Economic Monitor

Industrial production Source: World Bank Global Economic Monitor

Industrial value added is bigger in emergent and middle income countries than advanced and G7 countries, since 2017/18. Several other data contradict classical imperialism (or here). We divided the period of this inversion in the productivity variable in three sections: 1990, 2000, and 2010. We observe average gross capital formation and compensation to employees as share of GDP, as a way to measure constant and variable capital (average as in the arithmetic mean of all countries in each region). But not only to look at organic compositions, and their effect on the rate of profit. We're looking for investment in capital-intensive aspects that might reflect on productivity, and the labour-component part compared to the capital component. We should be able to look at the process of this productivity inversion and growth appearing nominally since late 90’s. We found that the only region where gross capital formation has fallen, is the United States, Canada and Europe. Low income countries have jumped into investment and gross capital formation lately, surpassing high income countries as well; Africa, Latin America and Asia all augment their gross capital formation. Plus Africa, Latin America and Asia all augment their gross capital formation while still being labor intensive, because of the biggest share of employee compensations, or a biggest share of the labor component compared to North America and Europe. Since these regions are coming up starting from a more backwards point than the Triad, they still have a lower organic composition, which means a wider range between accumulation and profits, and so the possibility to augment productivity. So gross capital formation grows, but organic compositions do not rise that much, since the labour component is held steady. With the sole exception of North America and Europe, the wholeworld market enters a cycle of growth for both capital investment and the labour component, all within the long fall of the profit rate. Let's remember that when capital investment and investment in labour both increase, is precisely what produces higher productivity (as it happened before, for example, during the post-war boom and all upward cycles before, like German and North American industrialization between the last late XIX century depression and XX century's Great Depression, all of this according to Mandel). We don't mean to say the economy is in full swing: actually, quite the opposite, it's the contracted reproduction proposed and studied by Mandel. 

 

 

Share of GDP gross capital formation (percentages)

	1990	2000	2010
Africa	0.14	0.16	0.22
Latin America	0.20	0.21	0.25
Asia	0.20	0.21	0.24
North America and Europe	0.25	0.21	0.23

 

 

 

Share of GDP compensations to employees (percentages)

	1990	2000	2010
Africa	0.53	0.52	0.49
Latin America	0.50	0.50	0.49
Asia	0.47	0.45	0.42
North America and Europe	0.60	0.57	0.57

 

 

Source: Penn World Tables 10.1

 

We see the curve from the rising gross capital formation of the late 90’s and early 00’s due mainly to low income and emergent countries. Comparatively, North America and Europe fall, and they kind of bounce back, but not to their prior level. It’s the only region where this happens. Africa, Latin America and Asia all improve positively their share of gross capital formation. Actually, the biggest growth of gross capital formation comes from Africa, talking about uneven and combined development! (confirming the African boom, without any apologetics at all -just to be sure we're not doing apologetics, we could say Africa starts from such a backwards point compared to the others, that it produces a qualitative jump based on uneven and combined development, to the point where it reaches bigger shares of gross capital formation than North America and Europe-). We live in a world market where the main gross capital formation is not coming from Triad countries, just like bigger industrial value added is being produced now in the peripheries, and not the advanced countries. Contrary to commonplace marxism, the peripheries are leading the way of industry, and it's the high income countries which are falling back even below their own levels of capital intensive processes. Capital intensive stops being considered 'advanced', and labour intensive as 'peripheral': it's emergent and low income countries which are, during this century, capital intensive in their investments (even South East Asia and the Pacific is increasing it's organic composition, after a whole half-a-century of a bigger share of labour, but still comparatively larger if we look at North America and Europe). We confirm this and this. The conjunction between a growth in gross capital formation and the labour component in emergent and low income countries, is not due to an expansion, but to the long fall in the profit rate, impeding gross capital formation in advanced countries, in countries where processes are already capital-intensive enough. And opening a wider range between the accumulation rate and the profit rate for peripheral societies.

Going back to Mandel, finally: his contracted reproduction needs to be investigated in full. Plus the industrialization of the "Third World" seems to be marking the beginning of the end for late capitalism as the stage that follows monopoly capital and classical imperialism, etc. This avenue also needs imperative research and investigation. If true, basically what's happening in North America and Europe is a contraction of reproduction, and the upsurge by emergent and low income countries is just a manifestation of how capitalism feeds off of backwardness. Is not only North America and Europe which are contracting their reproduction, but also the upsurge by emergent and low income economies, the ones who represent in full this contracted reproduction. Mandel discusses some scenarios, so we can now add more characteristics as well to contracted reproduction: a fall  in the rate of accumulation (the slowing down of gross capital formation), and then a higher productivity based on smaller, more backwards contexts (if capital shrinks, and investment shrinks, but without putting output at risk, then you could basically turn productivity upwards with less costs and expenses, so the cutting-costs rationale might actually offset any fall in the profit rate, and the rest of the variables (especially productivity).