ABSTRACT

This is an exercise in utopia design -- global utopia. As any utopia, it is incomplete but serves the purpose of guiding the imagination. The article is a package with two parts -- (1) green and (2) red (in the sense of political colours), both being elements of the same vision (utopia). Part 1 shows the possibility of a green mode of production (green as an engine of growth / accumulation). Part 2 shows the possibility of a red mode of remuneration (world wide wage parity, global pay equity).

Part 1 -- Green as an Engine of Global Growth
 

1.  INTRODUCTION

This part explores whether "green" (the goal of ecological sustainability) could be an engine of global economic growth (accumulation) in a "green mode of production and consumption". A scenario method is used. The "steady state" is defined as a physical, rather than a money-valued, state.
 

2. "GRAY" AND "GREEN"

One could think about concepts like "aggregate demand" and "technological innovation" in such a way that the concepts are split into "gray" and  "green" components ("gray" = unsustainable; "green" = sustainable). Thus, one could say that:

             aggregate demand          =    gray demand  +  green demand
and
             technological advances   =    gray advances + green advances

At the present time, we have, say, 80% gray demand (non-sustainable) + 20% green demand (sustainable); correspondingly, we have, say, 80% gray technology (non-sustainable) and 20% green technology (sustainable). (The figures are probably wrong, but just for the sake of argument). "Green demand" includes health, education and social services demand and demand for software and computer-related services. And "green technology" includes technological support for those services, as well as the internet and computers as tools of work, commerce or entertainment, fish farms, windmills, and so on. Given these distinctions, it is quite imaginable that demand and technological output (and world income) could increase without being unsustainable -- namely, if the mix of gray and green is drastically shifted in the green direction -- say, from 80% gray and 20% green to 80% green and 20% gray. Seen this way, "green" could even be a driving force of (money-valued) "green growth" or "green accumulation" or "green development", or whatever you call it -- and could gain public acceptance. $10,000 worth of computer hardware and software is relatively "green", compared with $10,000 worth of automobile. $10,000 worth of solar collectors in the Sahara desert is relatively "green", compared with $10,000 worth of gasoline. $10,000 worth of hydrogen-powered busses is relatively "green", compared with $10,000 worth of gasoline-powered automobiles, and so on. By switching from the green to the gray variety, a Canadian consumer would not suffer a drop in (money-valued) consumption; and farmers in the Sudan don't care whether they get irrigation using solar-powered electrical pumps or gasoline-powered pumps, as long as they get them.
 

3.  PHYSICAL AND MONEY-VALUED

The global ecosystem is under stress in more than one way -- from depletion of resources, to destruction of species of plants and animals, to pollution, and so on. The notions of sustainability and unsustainability imply that the global ecosystem has "limits to growth". Growing "ecostress" is thus developing against the "limits to growth". It is important to note that ecostress and limits to growth are physical concepts. Thus, air pollution is physical and is making people physically ill. The burning of gasoline is physical and is changing the atmosphere in physical ways. In contrast to these ecological concepts, which are physical, the wealth of a community is a money-valued concept which is commonly measured as GDP or GDP per capita. What is the relationship between these physical and monetary concepts? This question brings us to a very important point -- namely, that the same amount of monetary value can represent two radically different mixes of physical situations or processes. In my example above, $10,000 is the monetary value, but the physical situations corresponding to this monetary value differ radically from an ecological point of view, as follows:

              monetary value        physical object or process            physical ecostress
                                             (or portion of)
              $10,000                  automobile                                   high
              $10,000                  gasoline consumption                   high
              $10,000                  hydrogen-powered bus                low
              $10,000                  solar energy collectors                  low

The ecostress associated with a given GDP is variable -- it depends on the gray/green mix on the physical side. For example:

                                              gray/green mix of GDP               resulting ecostress

                                              gray                   green
                                              component         component

                                              80%         +       20%         =      high ecostress

                                              20%         +       80%         =      low ecosstress

How can ecodisaster(s) be prevented? One strategy is to stop economic growth (GDP growth) altogether. This strategy is predicated on the assumption that GDP growth is equal to the growth of "gray" (unsustainable) production and consumption and that the content of GDP is 100% "gray". An alternative strategy is to radically shift the content of GDP from "gray" to "green" (physically sustainable). By phasing out "gray growth" and phasing in "green growth" , one could have a process in which ecostress is decreasing while GDP is increasing (for an illustration, see my scenario below, section 5).
 

4. NOTE ON TERMINOLOGY

Terminology in this field is not standardized so that misunderstandings may ensue due to differences in terminology. Here is a simple correspondence table for key concepts:

                                                     Author/Terminology
                                                     general literature, Daly           Douthwaite             in this scenario

ecologically positive concept          sustainable development        good growth           low-ecostress growth
ecologically negative concept         economic growth                   bad growth             high-ecostress growth

References: Daly (1997), Douthwaite (1998)
 

5.  SCENARIO

For illustration of the relationship between "physical" and "money-valued", here is a scenario with some hypothetical numbers. The scenario works with three points in time -- namely, "now" (= year 0), 25 years into the future (=year 25), and 50 years into the future (=year 50). The system which the scenario refers to could be the world-system or a national system. "Ecostress" and "limits to growth" are measured in physical units and GDP is measured in monetary units.

Assumptions:
(a) Limits to growth -- The limit to growth of the system is assumed to be constant over the 50 years. The limit is 1000 physical units. That is supposed to mean that the system cannot tolerate more than 1000 units of ecostress.
(b) Ecostress -- Measured in "stress units". Ecostress is multidimensional. Thus, using just one variable for ecostress is a gross oversimplification. But the purpose of this scenario is to clarify concepts rather than to provide a workable empirical model.
(c) Alternative world processes -- The scenario assumes two alternative world processes -- namely, a "gray" world process (high ecostress) and a "green" world process (low ecostress).
(d) Gray world process -- In the "gray" world process (high ecostress) the assumption is that the relationship between GDP and ecostress is 2 : 1. In other words, for 1000 monetary units of GDP we have 500 physical units of ecostress; for 1500 monetary units of GDP we have 750 physical units of ecostress, and so on.
(e) Green world process --  In the "green" world process (low ecostress) the assumption is that the relationship between GDP and ecostress is 10 : 1. In other words, for 1000 monetary units of GDP we have 100 physical units of ecostress; for 1500 monetary units of GDP we have 150 physical units of ecostress, and so on.
(f) GDP growth -- In order to keep the numbers simple and staying away from exponential figures, I assumed that GDP grows by 50% in the first 25 years (i.e., from 1000 to 1500) and another 50% in the second 25-year period (i.e., from 1500 to 2250).

These assumptions are summarized in Appendix 1. The scenario is shown in Figure 1.
 

        Figure 1 -- Scenario with GDP, Limit to Growth and Alternative Ecostresses

Figure 1 shows four lines -- namely, a line for GDP (monetary values), increasing from 1000 monetary units to 2250 units; a line for limit to growth (constant at 1000 physical units); a line for the gray-world ecostress (from 500 to 1125 physical units); and a line for green-world ecostress (from 100 to 225 physical units). In the gray-world alternative, the ecosystem breaks down after about 40 years (i.e., at the point at which ecostress intersects with the limit to growth). In the green-world alternative, the ecosystem does not break down during the 50 years and ecostress stays well below the limit to growth of 1000 units. Note that the GDP is the same for both alternative world processes.
 

6.  SCENARIO WITH TRANSITION PATH TO SUSTAINABILITY

The scenario can be enlarged for a thought experiment about transition to sustainability. Let us assume (a) that the present capital stock and consumption habits of the world-system are all "gray" (unsustainable, high ecostress); and (b) that the ecologically responsible managers and citizens of the world made a concerted effort to progressively abolish the "gray" capital stock and "gray" consumption patterns and replace them with "green" capital stock and "green" consumption patterns (sustainable, low ecostress); and (c) that this would be accomplished over 50 years. In our scenario that strategy leads to a transition process in which ecostress decreases from 500 (in year 0, i.e., the gray ecostress level) to 225 (in year 50, i.e., the green ecostress level). At the same time GDP growth (monetary units) is the same as in the other two world-processes. See, Figure 2.
 

  Figure 2.  Scenario with Transition Path to Sustainability

Figure 2 illustrates how, during a transition process, ecostress (physical) may decrease while GDP (money-valued) may increase at the same time -- namely, if there is a radical shift in the ecological composition of GDP during a transition to sustainability. The scenario serves to underline the claim that the relationship between GDP (money-valued) and ecostress (physical) is not necessarily a constant 1 : 1 relationship, at least, not in theory. In other words, the ecological composition of  GDP may change (i.e., the ecological composition of capital and the ecological composition of consumption).
 

7. "GREEN" AS AN ENGINE OF GROWTH

Progressively replacing the world's "gray" capital stock by "green" capital stock and "gray" consumption by "green" consumption is not only good for the ecosystem (lowering ecostress, increasing sustainability), but is also good for economic activity. Let's begin with a microlevel example. Think of a Canadian environmentalist family who had a house which was heated with an oil furnace. They replaced the oil furnace with alternative heating, including wood stoves, electrical heating, or solar heat (active and passive). The transition from the old engineering of the house to the new engineering meant phasing out "gray" capital stock and replacing it with "green" capital stock. In the process of re-engineering, money had to be spent for house restoration and new heating systems. This example shows that the "green re-engineering" at the microlevel generated money flows ("effective demand"). Similarly, a "green re-industrialization" of the world would generate large volumes of capital expenditures. For example, "green re-industrialization" in the transportation sector could mean the phasing in of hydrogen-powered vehicles and hydrogen-generating facilities. Such a "green re-industrialization" would involve both (a) a lowering of ecostress (physical, increase in sustainability) and (b) increases in GDP (money-valued). Seen this way, "green" (i.e., the active pursuit of sustainability) could actually be a prime engine of economic growth (in the sense of GDP growth). In this view, ecological concerns do not lead to an end of growth but, on the contrary, can be an engine (stimulus, motivator) of  GDP growth. The very production of, and demand for, the new "green" output could be invigorating for the economy. If pursued on a global scale, "green" could be the basis for increased worldwide prosperity.
 

8. THE 'STEADY STATE'

The theoretical concept of a 'steady state' means, in the perspective of my scenario, a steady physical state of the economy -- i.e., a state in which the level of physical ecostress stays below the physical limit to growth of the system. As was shown above, that does not preclude the possibility of an expansion of aggregate wealth (GDP, global GDP), which is a money-valued concept.
 

9. ORGANIZING THE TRANSITION TO SUSTAINABILITY

Keynesians of various stripes and market socialists accept market mechanisms in the economy, but they reject market situations in which the public interest is ignored and (global) corporations set the political, economic and social agenda. Public intervention in the economy is required, according those modes of thinking. Transition to sustainability requires a certain amount of public intervention in the economic process.

A recent proposal concerning one aspect of such a project is Kovel's proposed WPTO (World People's Trade Organization) which would introduce a form of planning into the international trade regime for the purpose of achieving ecological objectives. Kovel writes:

"The core function of the WPTO would be the setting of a price structure according to which trade would be carried out. The key here would be to introduce--and enforce--an alternative calculus of pricing relative to that of the prevailing system. In place of the dominant calculus according to which goods are traded by their profitability to capitalists, we need an order wherein goods are traded according to their "ecological prices" (EP). The computation of such prices would go along with determining the differential between EP's and prices on the capitalist markets, and by the exacting of tariffs accordingly.

In this scheme of things, production along ecological lines, for example, organic agriculture, would have minimal or no tariffing for purposes of trade. Furthermore, such production could also receive subsidies generated by tariffs exacted from those producers whose EP's exceed their price on the capitalist ("free") market. As an example of those commodities on which a high EP would be set, we could obviously turn first to an examination of the automobile industry in its current super-polluting and wantonly wasteful state."
(Kovel 1999)

10. OPPORTUNITIES FOR THE SECOND AND THIRD WORLDS

The people of the Second and Third Worlds (the semi-periphery and periphery of the world economy) do not believe in austerity, neither in austerity for ecological reasons (on North-South differences regarding the environment, see, e.g., Bergesen/Parisi 1997: 364-5).  The approach sketched above could, conceivably, satisfy their aspirations for growth of consumption while, simultaneously, actively protecting the global ecosystem.
 

11. POLITICAL FEASIBILITY

The importance of public pressure for promoting ecological responsibility has been recognized by some -- see, for example, the campaigns by Greenpeace or a statement like the following:

"The power for change lies with the general population world-wide.  If they remain uninformed, their spontaneous revolts will simply accelerate the descent into anarchy.  But if properly informed, the popular mobilization required to reorganize the social order--already implicit within the delegitimation of the current states--can be focused into a coherent global objective."
(Grimes 1997)

12. GREEN MODE OF PRODUCTION AND CONSUMPTION

Producing wealth in the above manner could, perhaps, be called a "green mode of production and consumption". This view presupposes that a "mode of production" is not conceptualized as part of the essence of history but, rather, as an intellectual construct (tool) which may be useful for comprehending and shaping history (see also, Frank's critique of the concept of "mode of production" (Frank 1999)). Using the concept of a "mode of production" in this context may be controversial. However, it makes sense, based on the following considerations. The concept of "mode of production" has two sides and has been used in two ways. The two sides are (1) its factual-empirical-historical side and (2) its normative - utopian - futuristic side. The two uses are (1) in the analysis of history and (2) in the designing of an alternative future. Thus, if one talks about capitalism as a mode of production, he uses "mode of production" in the analysis of history and uses it as an historical - sociological - empirical concept. If, on the other hand, one talks about socialism as a mode of production, he may be referring to the mode of production in the Soviet Union and other socialist societies -- which is an empirical use, but he may also be referring to a socialist counter-project, in the sense of a socialist or communist utopia -- this is using "mode of production" in a futuristic - normative - utopian way. When I am postulating a "green mode of production", I am using the concept in a futuristic - normative - utopian way, namely, as a description of a counter-project, of something to be created rather than as something existing.

Chase-Dunn and Hall (1998) have analyzed world history using an approach which they call "institutional materialism", which contends "that there have been qualitatitively different logics of accumulation (kin-based, tributary and capitalist) and that these have transformed the nature of the social self and personality, as well as forms of calculation and rationality." (Chase-Dunn/Hall 1998: section 2). Whether the "green" logic of growth /production /accumulation discussed above would, if further developed and implemented, constitute a sub-species of the capitalist logic of accumulation or a "qualitatively different logic" remains to be debated. Tentatively speaking, a "green" logic of accumulation would be significantly different from an historically extant logic of capitalist accumulation and from a (traditional "red") socialist logic of accumulation. However, there would also be some overlap of a "green" logic of accumulation (economic growth) with either a capitalist or a socialist logic of accumulation. A study in which "green" overlaps with "capitalist" is, for example, a recent OECD study on the potential of a global boom resulting from new cyber-age technologies (OECD 1999). Moreover, "green" overlaps also with "socialist" or "communist"--  for example, in Schwartzmann's concept of "solar communism" (Schwartzmann 1996).
 

13. IN CONCLUSION

This article explored, very briefly, the feasibility of "green" as an "engine of growth" in a "green mode of (global) production and consumption". Many observers have been complaining about a lack of vision in contemporary public life. My exploration suggests that "green" could, indeed, be an engine of global prosperity which respects the physical limits to growth and might even contribute to greater global justice.
 

14.  REFERENCES for Part 1 (Green)

Bergesen, Albert, and Laura Parisi (1997)  "Discovering the Environment," Journal of World-Systems Research  3:364-368, online at: https://jwsr.ucr.edu/

Chase-Dunn, Christopher, and Thomas D. Hall (1998)  "Paradigms Bridged: Institutional Materialism and World-Systemic Evolution," Paper presented at the XIV World Congress of Sociology of the International Sociological Association, July 26-August 1, 1998, Montreal, Canada; online: /archive/papers/c-d&hall/intsoc98.htm

Daly, Herman E. (1997)  Beyond Growth: The Economics of Sustainable Development. Beacon Press, USA

Douthwaite, Richard (1998)  "Good Growth and Bad Growth", online seminar paper, at:  http://csf.colorado.edu/lists/econ-ecol/good_bad_growth.douthwaite.html

Frank, Andre Gunder (1999 ?) "Transitional Ideological Modes: Feudalism, Capitalism, Socialism," online: ftp://csf.colorado.edu/psn/authors/Frank.Gunder/feudalism-capitalism-socialism

Grimes, Peter (1997)   "The Horsemen and the Killing Fields: The Final Contradiction of Capitalism",
                      Paper presented at the XXI. Annual Meeting of the Political Economy of the
                      World-System, April 3-6, University of California at Santa Cruz 1997, online at:
                       http://csf.colorado.edu/forums/wsn/99/msg01593    (see, 28 November 1999, Jones)

Kovel, Joel (1999)   "Beyond the World Trade Organization", online: http://www.greens.org/ny/tohtml.cgi?kovel       (October 26, 1999)

OECD (1999)  21st Century Technologies: Promises and Perils of a Dynamic Future. OECD Publication: Code 031999021P1

Schwartzmann, David (1996) on "solar communism" in: Science & Society, Special Issue "Marxism and Ecology", 60, No.3, p. 307-331.
 
 

15. APPENDIX 1 (for Part 1)

Table 1 --  Scenario Values
 

Part 2 -- The Principle of Global Pay Equity
 

QUOTATIONS
(1)  "Everyone, without any discrimination, has the right to equal pay for equal work."
           Universal Declaration of Human Rights (1948), Article 23 (2)
(2)  "renegotiation of historically given wages"  Wallerstein 1978: 233
 

1.  INTRODUCTION

This part examines wage disparities between countries and contends that a major portion of these global wage disparities can be described as "unequal pay for work of equal value". Furthermore, the article argues for international wage parity (global pay equity) as a  general principle and long-term goal.  Wages in the education sector are used as an example.
 

2. WAGE DISPARITIES IN THE EDUCATION SECTOR

Here are some statistical data as reference material for the subsequent theoretical discussion. Table 1 shows monthly incomes of educators in 22 countries. The table is based on data from ILO (International Labor Organization).

                                                                               Country     "International
                                                                                                      dollars"
                                                                                                  (PPP values)

Table 1 shows monthly wages for teachers and other educators around the world at purchasing power parity values  (PPP values). The wages range from 2959 PPP dollars in the Republic of Korea to 92 PPP dollars in Kyrgyzstan. The income gap for educators in this group of countries is 32 : 1 in terms of purchasing power. [For wages in US dollars and in local currency, see Appendix A. The figures for Korea seem high, but this is what ILO reports.]

I would like to discuss two problems, namely: (a) On the one hand, the skills required for teaching reading, writing and arithmetic or many other subjects are the same whether one teaches this in Canada, Peru, or elsewhere. Providing education in schools, universities, and other institutions is a service which is very similar around the world.  On the other hand, the incomes of educators are very different. What does that mean in terms of the value of labour ? (b) We are used to the fact that people have different wage rates in different countries and it is true that different countries have different abilities to pay. However, it is also true that the existing global wage structure violates the general principle of pay equity, which is the principle of "equal pay for work of equal value". What can we learn from the foregoing about the principle of global pay equity?
 

3.   A GLANCE AT THE LABOUR THEORY OF VALUE

One might be inclined to think that the problem, as posed, can be solved by applying the labour theory of value. However, that does not seem to be the case. The labour theory of value theorizes about the value of "commodities" (goods and services). (Note that "value" is not the same as "price". The price of a good or service may deviate from its value in certain places or at certain times. However, in the long run the price will tend to reflect the value of the good or service, according to the labour theory of value in its Marxist form.) According to the labour theory of value, the value of a good or service ("commodity") is determined by the amount of labour which is embodied in the good or service -- or, more precisely, by the amount of "socially necessary simple labour" (Meek 1956: 164, 177).

When we apply these notions to the data shown in Table 1, the first question to be clarified is: Do the data in Table 1 show (a) the priceof a service ("commodity"); (b) the value of a service ("commodity"); (c) the price of labour used for producing a service ("commodity"); or (d) the value of labour used for producing a service ("commodity")? The answer is (c) -- namely, the data in Table 1 show "wages", i.e., the price of labour used for producing a service ("commodity").

The next question is: Can the labour theory of value explain the difference of wage levels between different countries? My preliminary answer is "No", the reason being that the dependent variable of the labour theory of value (namely, that which is to be explained) is commodity value, and not labour value or  labour price  (wage level). In other words,  in the labour theory of value  the dependent variable is the value of "commodities", while the value or price of  labour is the independent variable (i.e., is given). Thus, the value of a good or service (commodity)  is explained as the product of labour hours times labour value-per-hour. That leaves us with the problem of finding out what determines the different wage levels across countries? Without attempting to give a full answer to this problem, here is a correlation.
 

4.  WAGES AND GDP/CAPITA

The wage level is correlated with the wealth of the country. Rich countries can afford to pay their educators better than poor countries (see, Table 2). The correlation between educators' wage levels and GDP per capita is  high, but not perfect -- the correlation for the data in Table 2 is  r = 0.85 (using PPP values, for N=20 countries).

                                                   Table 2.   Correlation of Wages and GDP/Capita
 

Table 2 shows that the wage level of educators correlates strongly with the wealth of the country (GDP/capita) -- the correlation is r = 0.85. Does that mean that the work of the educators in a poor country is less valuable than the work of educators in rich countries? It is clear that the work of educators in those countries is less money-valued, but is it less valuable? This question leads us into a discussion of the problem of pay equity.
 

5. CONCEPT OF GLOBAL PAY EQUITY

The concept of pay equity is a normative concept or principle which states that workers ought to be paid the same wage for work of the same value, irrespective of other criteria ("equal pay for work of equal value"). The principle is an articulation of the value of fairness. An implication of the principle is that a deviation from the rule of "equal pay for work of equal value" constitutes discrimination. The women's movement developed this principle in order to gain wage parity of women's wages with men's wages. For example, if a person produces shoes or makes computer programs, it should not matter whether that person is male or female. What counts is the value generated. If person A generates the same value as person B, then the remuneration ought to be the same, according to this principle.

Parallel to "pay equity", global pay equity can be defined as a normative concept, rule, principle, or doctrine which states that workers ought to be paid the same wage for work of the same value, irrespective of global location (i.e., regardless in which country they work) -- in other words, "equal pay for work of equal value globally". Various questions arise from this concept and must be addressed.
 

6.  OPERATIONALIZATION OF "WORK OF EQUAL VALUE"

How can it be established whether work A and work B are of "equal value" or not? The problem can be subdivided. (a) If the work is the same work, then it is of equal value. For example, when a worker in a Canadian car factory assembles a certain number of doors per hour into cars and when a worker in a Mexican car factory assembles the same number of doors per hour into cars, then the work is the same. (b) If the work is not the same, it may still be of "equal value". The determination of equivalent value is not easy, but can be done. Labour unions and women's organizations have worked out certain practicable procedures to help with this kind of judgment.

How could we evaluate whether, in our example, the work of educators, say, in Canada is equivalent to, say, the work of educators in China or another country? It appears reasonable to assume that teaching arithmetic in Canada to, say, 30 children for one school year has the same value as teaching the same arithmetic to 30 children for one school year in China, provided the learning success is the same. If the learning success is greater in China, then it could be said that the value of that teaching service was greater in China (or, vice versa). This kind of reasoning is at the micro-level. In addition, we can make macro-level comparisons. The wage levels of educators in Table 1 are averages-- i.e., they are based on the aggregate of all education services delivered in the country. These aggregates contain various "mixes" or "baskets" of education services. As a first approximation, one could look at the composition of all teaching services of a country in terms of "elementary level", "secondary level' and "tertiary level". Table 3 shows data for two of these levels.
 

                                                            Table 3. School Enrollment, mid-1990s
 

Table 3 shows that school enrollment at the primary level was around 100% in virtually all countries shown (meaning, all children of the age group for primary education were enrolled. Numbers greater than 100 imply that some older children were also enrolled at the primary level.) In contrast, enrollment at the secondary level ranges from a high of 139% for Netherlands to a low of 58% for Mexico. That means that in Mexico only 58% of all pupils eligible for secondary education were actually enrolled. The over-enrollment in Netherlands means that many students were in secondary education who were older than the normal age range for secondary education. Table 3 suggests that the mix of educational services differs between countries. This would have to be noted in a careful assessment of equivalence of work between educational systems. An interesting case in Table 3 is the pair Poland and Canada (or other comparable pairs). Here the mix of primary and secondary education is nearly identical, whereas the average wages for educators of these countries differ greatly. The situation is one of unequal pay for work of equal value. Table 3 suggests further that differences in the value of educational services which may exist (e.g., Kyrgyz Republic versus Israel) are by no means as great as the wage disparities for the educators (compare Table 3 with Table 1).
 

7.  DIFFERENCE BETWEEN THE PRINCIPLE OF PAY EQUITY AND THE LABOUR THEORY OF VALUE

A theoretical issue to be discussed is the relationship between the principle of pay equity and the labour theory of value. The main difference between the labour theory of value and the principle of pay equity has to do with the difference between empirical and normative. The labour theory of value is an empirical theory which explains how the value of a product or service comes about -- namely, as a result of labour input. In formal notation, this can be written as: Y = f(L) -- in words, Y (the value of output) is a function of  L (the value of labour input). Such a theory can be used for supporting certain wage claims on behalf of labour (political use). Nevertheless, the theory is essentially an empirical theory. In contrast, the principle of pay equity is a normative principle to begin with -- namely, a doctrine about how labour ought to be evaluated. This doctrine is not about "IS" (i.e., not an empirical theory), but about "SHOULD" and "MUST"; it states that work efforts which generate output of equal value MUST be remunerated with the same wage. According to this doctrine, remuneration for work must be fair -- and fairness is operationally defined as equal pay for work of equal value. The empirical question  "what determines the value of a certain product (commodity)?" is not raised and not answered by the principle of pay equity. Note that  this principle does not specify absolute value levels, but its reasoning is in terms of comparative (relative) values, instead. Thus, if person L (low wage) receives a lower wage than person H (high wage) for the same work, fairness can, theoretically, be brought about by lowering the wage of H to the level of L. However, the practical and political intent of the principle is in the other direction -- namely, to support demands by L to raise his/her wage to the higher level of H. Labour unions use this reasoning when they want their group of workers to gain wage parity with another group; and the women's movement is using this principle in its demands for pay equity between women and men.
 

8. COULD THE WORLD ECONOMY FUNCTION WITH GLOBAL PAY EQUITY?

A call by workers of the global periphery for pay equity with workers of the global core would be a  radical demand.
The question arises: Is it at all possible to apply the principle of pay equity globally? Could the world economy function and prosper with global wage equity or would the world economy break down?

ARGUMENT AGAINST GLOBAL PAY EQUITY

Perhaps, the most important argument against global pay equity results from the lack of money. Most education is paid for by the state. States have spending limits. The state of China or Mexico could not pay its educators at Canadian or French rates. Or, when we talk about work in the business sector, a Peruvian or Hungarian business could not pay its employees at United States or Dutch rates. There may be other arguments against global pay equity, but this is probably to most important one.

ARGUMENTS FOR GLOBAL PAY EQUITY

(a) Historical Precedents

The present global wage gap is extremely large. One can point to various historical precedents which demonstrate that economic inequities can be reduced or abolished without damaging the prosperity of the system (national or world economy). These precedents include: (1) Global income inequality was less severe in 1965 than it was in 1995, yet the world economy flourished in 1965. It can even be claimed that the world economy flourished more in 1965, with less global inequality, than it did in 1995, with more inequality. (2) Pay equity for women has been promoted and partially implemented in various countries, yet the economies of those countries did not break down. (3) In the Europe of 1848 the call for an 8-hour work day and abolition of child labour were radical demands deemed detrimental to business, yet these demands were implemented in many countries without damaging the prosperity of those countries. (4) The United States economy survived the abolition of slavery in the 19th century.

(b) The Global Demand Argument

When wages rise, aggregate demand increases. If the wages of the mass of workers in the periphery (non-OECD countries) were raised in the direction of  pay equity with wages in the core of the world-system (OECD countries), global demand would increase. According to global-Keynesian views, such an expansion of global demand would have beneficial, rather than detrimental, effects for aggregate global prosperity (world income).

(c) Fairness Argument

It is unfair to pay somebody less for work of equal value, just because they live in another country with a different culture.
 

9. IMPLEMENTATION PROBLEMS

Claiming that global pay equity is desirable and theoretically possible is not to say that implementation of global pay equity would be easy. How can global wage parity be brought about, in practical terms? Here we must pay attention to time frames and degrees of implementation. A "shock therapy" of implementing global wage parity from one day to the next is impossible and would create chaos and breakdown (more than there is already). On the other hand, global pay equity is a reasonable, desirable, and feasible goal for the long run. The powers that manage the world economy can take steps and implement policies and mechanisms which would move the world economy toward greater pay equity, and interested parties like labour organizations could fight for such a principle.
 

10. SUMMARY AND CONCLUSION

Wages are highly uneven between the countries of the world, even for work which is the same or which is of equivalent value. The present world situation is, to a large extent, a situation of  unequal pay for work of equal value. Observers with a sense of fairness should be able to agree that global pay equity ("equal pay for work of equal value globally") is a desirable long-term goal. Implementation of such a goal is difficult in practice, but worthy of further research and action.
 

11. REFERENCES for Part 2 (Red)

ILO (1999) online statistical database, entitled "LABORSTA on the WEB", at: http://laborsta.ilo.org  (or can be found via the ILO home page at:  http://www.ilo.org), Table 5A

Köhler, Gernot (1998), "The Structure of Global Money and World Tables of Unequal Exchange." Journal of World-Systems Research 4: 145-168  (online journal at: https://jwsr.ucr.edu/ )

Meek, Ronald L. (1956)  Studies in the Labour Theory of Value. London, England: Lawrence & Wishart

UNICEF (1999), online statistics, entitled "Statistical Data", at: http://www.unicef.org/statis

Wallerstein, I. (1978) "World-System Analysis: Theoretical and Interpretive Issues," in: Kaplan, B.H. (ed.), Social Change in the Capitalist World Economy. Beverly Hills, USA: SAGE Publishing, p. 219-235

World Bank (1999) online statistical database, entitled "Global Development Network Growth Database", at: http://www.worldbank.org/html/prdmg/grthweb/GDNdata.htm
 

12.  APPENDIX A for Part 2 (Table 1)

Table 1 is a segment of the more comprehensive Table 4.

Notes from the source database and notes on my estimates:
Canada: Monthly rate estimated as weekly rate * 4
China: "Incl. Cultural, art, radio and television activities"
Finland: "Full-time employees"
Isle of Man: Monthly rate estimated as weekly rate * 4 . Pound assumed to be equal to British pound.
Korea, Republic: "Incl. family allowances"
Netherlands Antilles: "Curacao"
Peru: "Wage earners", not "Employees". Monthly rate estimated as daily rate * 20
United Kingdom: "Excl. Northern Ireland". Monthly rate estimated as hourly rate * 160
 

13. APPENDIX B for Part 2 (Table 3)

Source: UNICEF (1999)
Notes:
(a) The figures are for "Total" (= "boys" and "girls" together).
(b) Definition of "Gross Enrollment": (1) for primary level: "The gross enrollment ratio is the total number of children enrolled in primary school, whether or not they belong in the relevant age group for that level, expressed as a percentage of the total number of children in the primary school age groups." (2) for secondary level, analogous definition.
 

14. RELATED ARTICLES

Köhler, Gernot (1999)  "Global Keynesianism and Beyond", Journal of World-Systems Research, 5:225-241 (online at:  https://jwsr.ucr.edu/ )

Köhler, Gernot (1999)  "A Simulation of Global Exploitation", World-Systems Archive, Working Papers,  /archive/papers/kohlertoc.htm