Yang Heping: Criticism of “Unequal Exchange” Theories of Arghiri Emanuel & Samir Amin: Marxist Labor Theory of Value in International Trade

May 22, 2023

Author: School of International Trade and Economics, Beijing P.R.China, 100029

Summary

Differences in labor value are the source of huge profits in international trade. The so-called “unequal exchange” theory that is currently popular in academia in the West has distorted the Marxist labor theory of value, replacing the subject of exploitation from imperialist monopoly capital with the working class of the great powers. It advocates that the high wages and high “welfare” of the working class in developed countries are the result of the empire states using the excess profits obtained from exploiting the third world through “unequal exchange” to bribe the working class of the great powers. However, the value of a commodity is determined by the socially necessary labor time required to produce it, and the scope of “society” is determined by the scope of labor mobility. Therefore, as long as labor does not flow internationally, the value of the commodity will not have an international standard, and the value of labor will also have no international standard.

The labor theory of value related to the international trade means that the value of a commodity will not be higher than the socially necessary labor time required for the importing country to produce the same commodity domestically, and the value of labor will not be higher than the socially necessary labor time required for the commodity producing country to maintain the reproduction of labor (working men and women) domestically. The huge difference in labor productivity and labor value between trading countries has created advantage conditions for the bourgeoisie, which controls the means of production, to obtain temporary excess profits in international trade.

Arghiri Emanuel and Samir Amin, who have first proposed the theory of “unequal exchange”, denied that under the condition of labor mobility, the market that determines the value of commodities and the market that determines the value of labor are often different markets.

Instead, Arghiri Emanuel and Samir Amin have started from the international standards of socially necessary labor time and labor value, and made a fuss about production prices, violating the premise of the production price mechanism, and regarded the unequal labor exchange that inevitably resulted from the difference in production prices as the source of the exploitation of the third world by developed countries. As a result, they actually concealed the real mechanism for generating excess profits, which lies in the monopoly of resources, technology and markets by imperial monopoly capital. This use of the moral standard of “inequality” to accuse imperialism is hollow and non-Marxist. This article focuses on analyzing a simple commodity production and exchange model, and explains the relationship between differences in labor value, trade ratios, living standards, and average profit rates among trading countries. It reveals how the bourgeoisie obtains excess profits through the internationalization of commodity production and exchange, and explains that even in the absence of resource, technology, and market monopoly, international trade can still lower the value of labor in various countries, increase the exploitation of labor, and expand the number of unemployed people in various countries. It also increases the absolute living standards of the labor force while increasing the rate of surplus value and profit rate, and thus we can refute the pseudo-Marxist theory of “unequal exchange” that is still popular today.

This article is only the beginning for studying the characteristics of modern imperialism. There are a series of issues that need to be explored step by step in the future.

Preface

Today, the imperialist hegemony is intensifying, and some social imperialist Marxists are trying to create confrontations among the working classes of various countries. On the surface, they strongly condemn the plunder of the Third World by the great powers, but in reality, they are providing cannon fodder for the imperialist hegemony. They claim that the high wages and high “welfare” of the working class in developed countries are the result of the excess profits obtained by the empire from exploiting the Third World through “unequal exchange” to buy off the imperial working class, and replace the subject of exploitation from the imperial monopoly capital with the working class of the great powers, and use this to hostile the workers’ movement in Europe and the United States, which has been growing stronger recently. They are afraid that the workers around them will follow suit and hinder the progress of the imperialist hegemony, and spare no effort to destroy the unity of the proletariat around the world.

They use the theory of “unequal exchange” to oppose Marx’s theory of surplus value, covering up the real mechanism of exploitation. These filial sons and grandsons of Kautskyism, in the same vein as the populist right-wing are turning the anger of the working class against cruel exploitation from the monopoly capital groups that directly exploite them to other powers competing for hegemony. They preached that once their country rose and “entered the pass” to become an empire, the workers could also “benefit from it”, thereby encouraging the proletariat of various countries to kill each other for imperial hegemony. To this end, it is necessary for us to explain the basic laws of labor value theory in international trade, recognize the specific channels through which monopoly capital exploits the working class of various countries in the world to obtain excess profits, so as to see through this mistaken “unequal exchange” theory in the guise of “Marxism-Leninism”.

Like the “center and periphery” theory, the “unequal exchange” theory based on countries analyzes international trade from the perspective of circulation rather than production. Therefore, it avoids the question of how the monopoly bourgeoisie obtains surplus value and excess profits in the production field, conceals the true destination of surplus value and excess profits in international trade, and conceals the mechanism of the rise of China’s coastal export trade new richening. Therefore, the “unequal exchange” theory is actually an anti-Marxist doctrine.  Scholars who originally proposed the “unequal exchange” theory, such as Arghiri Emmanuel and his successor Samir Amin, are progressive scholars who were influenced by Marxism, stood on the side of the Third World, and opposed capitalism and imperialism.

However, they do not agree with the basic principles of Marxism in many places. In particular, Emmanuel tried to circumvent the imperialist monopoly on resources, markets, and technology in his 1972 English version of book “Unequal Exchange: A Study of Imperialist Trade”.

On the one hand, he denounced the fallacy of mainstream economics on international trade, but on the other hand, he mistakenly applied Marx’s theory of production prices to international trade and regarded it as the fundamental way for imperialism to plunder the Third World. In his book, Arghiri Emmanuel directly denied that the value of labor was determined by the cost of labor reproduction, and he regarded wages as an independent variable that could be independent of the cost of labor reproduction, and insisted that the increase in wages in a country must be based on the exploitation of workers in other countries. His views were severely criticized by Charles Bettelheim at the time. These academic controversies of the time have very important guiding significance for the revolutionary practice in today’s world.

Although in the eyes of scholars such as Emmanuel and Amin, it is the capital groups of the great powers that set up sweatshops (çalışma şartları kötü işyeri) in the Third World, and therefore, it is more or less relevant and true to regard “unequal exchange” as the root of exploitation, the characteristics of today’s era are very different from the era studied by these scholars. The shortcomings of this theory have been exploited by the social imperialists of the rising countries and transformed into an anti-Marxist doctrine, which then conceals the huge profits of the emerging monopoly capital groups in international trade and complains about the so-called “unfair treatment” they are facing.

In fact, the imperialists’ long-lasting excess profits in international trade are mainly obtained through the monopoly of technology, markets and resources, rather than through so-called “unequal exchange.” Using the latter to calculate the “excess profits” obtained by the empire and regarding “unequal exchange” as the source of exploitation violates the most basic Marxist labor theory of value.  For example, one specific reason given by one apologist for the new social imperialism for why the emerging powers cannot be empires is as follows:

“Becoming a core advanced developed capitalist country means exchanging one unit of domestic labor for multiple units of foreign labor. China’s current exports contain about 90 million man-years of domestic labor. If China were to exchange one unit of domestic labor for four units of foreign labor, as the United States does, then China’s imports would have to contain 360 million man-years of foreign labor. The labor contained in all the world’s exports is less than 500 million man-years, and it is impossible to find such a large area to import so many man-years of labor into China”. (See “A Criticism of the “Chinese Imperialism Theory”)

The logic here is very strange. Why would a core power insist on such a large-scale export? What’s wrong with exporting less and importing more, and enjoying to get tribute from all over the world?

It can be seen from this that they are either stupid or bad, either really don’t understand, or pretend not to understand the source of surplus value. In the final analysis, their calculation method is to use the labor time contained in the trade between the two parties to measure whether it is an “equal” exchange. This calculation method basically ignores the difference in production methods:  labor-intensive or capital-intensive method, and the huge difference in labor productivity caused by this difference. The Marxist labor theory of value has long refuted the fallacy that “the more inefficient the production, the higher the value of the product”, so this “unequal exchange” calculation method has nothing to do with Marxism.

In fact, this analytical method is the basis for Western mainstream economics to attack the Marxist labor theory of value, and it is a malicious distortion of the labor theory of value. At the risk of being too wordy, I will analyze this issue in more detail below.

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