Gernot Köhler
School of Computing and Information Management
Sheridan College
Oakville, Ontario, Canada L6H 2L1
e-mail: gernot.kohler@sheridanc.on.ca
November 1999
1. OBJECTIVE
This study attempts to clarify the conceptual relationship between "transfer
value" (unequal exchange, superexploitation) and "surplus value".
2. CONTEXT
The global income gap is widening; the First World is dominating the
world economy and shaping it so as to serve its own interests. "Unequal
exchange" is taking place between periphery and center of the world, so
that, in effect, the poor countries subsidize the rich and the labourers
in the periphery countries are the most exploited in the world-system.
Amin calls this the "superexploitation" of the labourers of the Third World.
The process of "unequal exchange", "center-periphery exploitation", or
"superexploitation" works through such channels as biased terms of trade
and biased exchange rates, or, generally speaking, through the biased (global)
"structure of prices". Thus, Amin writes: "...it follows that
there is superexploitation of labor in the periphery which totals as much
as $300 billion and which is largely hidden in the structure of prices"
(Amin 1980: 19) The figure of US $300 billion is Amin's estimate of the
annual outflow of value from the world's periphery to the center (around
1980, in current prices), due to "unequal exchange". Amin calls this value
alternatively "unequal exchange" or "transfer value" and states:
"It is this superexploitation that prevents the development of productive
forces on the periphery." (Amin 1980: 25) I have argued separately
that the same world-level mechanism is
also responsible for massive
unemployment in the center (First World, OECD). An interesting problem
arises, namely: What is the conceptual relationship between "transfer value"
and "surplus value"?
3. SURPLUS VALUE
The concept of "surplus value" is central to Marxist literature.
Similar concepts appears under different names and symbols also in post-Keynesian
and OECD literature. Conceptually, "surplus value" is the amount
of value which the worker helps to produce but does not get. In the aggregate,
the "mass of surplus value" in the economy is the difference between aggregate
income and total wages. Thus, if a total of 10 billion dollars worth has
been produced and earned by society and if the total amount of wages paid
is 6 billion dollars, then the "mass of surplus value" (i.e., aggregate
surplus value) is 4 billion dollars. Conceptually, this is clear.
The heterodox "national accounting identity" uses a similar distinction,
namely, Q = w L + r K where wL is all
wage income (namely, wage rate w times number of workers L) and rK
is all other income (namely, rate of return on capital r times volume of
capital K) (see, for example, Shaikh 1987). In Keynes's General Theory
we find the expression "wage bill (W)" which corresponds to wL in the heterodox
national income accounting identity (Keynes 1964). Finally, one finds a
category of "operational surplus" in the statistical accounts of OECD (e.g.,
OECD 1995: 34.-- This "operational surplus" comes out to be about 25% of
GDP, which is only about one half of "surplus value", but the concepts
have some similarity.) At the measurement level (operational level) there
are differences between authors. Some of these differences have to do with
the fact that Marx wrote at a time long before modern GDP-type national
accounting had been developed. A study which uses authentic Marx-based
concepts and measurements of surplus value is Moseley (1991). Other
Marxist authors calculate "surplus value" in a GDP-type context (see, the
discussion in Moseley 1991). (As a result, measurements of surplus value
differ between various authors.)
3. GLOBAL TRANSFER VALUE
The intellectual history of the concept of global transfer value
starts, perhaps, with the Latin American school and Prebisch.
Prebisch criticized the terms of trade between center and periphery
countries and argued that the terms of trade were deteriorating for the
Third World. The notion of unfair terms of trade was then further developed
by Arghiri Emmanuel who developed the theory, and coined the term, of "unequal
exchange" (Emmanuel 1962, 1972). Emmanuel proposed a conceptual definition
of unequal exchange, but did not have any operational definition nor quantitative
estimates of the magnitude of unequal exchange. Emmanuel's theoretical
definition of "unequal exchange" is, as follows:
"...unequal exchange is the proportion between equilibrium prices that is established through the equalization of profits between regions in which the rate of surplus value is ‘institutionally’ different..." (Emmanuel 1972: 64).
This is a theoretical definition and not an operational definition. How unequal is the exchange? How much value is unfairly transferred from the periphery to the center? Emmanuel did not give any precise figures. However, Emmanuel gave a sense of magnitudes involved when he wrote that: the "loss [sc. resulting from unequal exchange] ... is enormous in relation to the poverty of the underdeveloped countries while being far from negligible in relation to the wealth of the advanced countries." (Emmanuel 1972: 265) Some authors provided estimates for individual countries. Gibson (1980) estimated a loss for Peru in 1969 in its trade with USA as 38% of its exports to the USA (see, Raffer 1987: 94). Webber and Foot (1984) estimated for the Philippines in 1961 that Philippine exports would have amounted to 5.269 billion pesos, if valued at Canadian wages and prices, instead of the actual 1.129 billion pesos (see, Raffer 1987: 95). Worldwide estimates of unequal exchange are available from Amin and Köhler. Amin mentions global figures for unequal exchange in two separate publications -- an estimate of $22 billion for 1966 (Amin 1976: 143-144) and an estimate of $300 billion for around 1980 (Amin 1980: 19). Köhler presented estimates of global unequal exchange for 1965 and 1995 (Köhler 1998a, 1998b).
In the intellectual development from a purely theoretical definition
of unequal exchange (Emmanuel) to some quantification of the concept (Amin)
and more quantification (Köhler), the concept of a "transfer value"
crept into the discussion (e.g., Amin 1980). The situation can, perhaps,
be seen in such a way that the expressions of "unequal exchange"
and "transfer value" are two sides of the same thing -- namely, "unequal
exchange" describes the process or mechanism, whereas "transfer value"
describes the quantity of value which moves from A to B in the process
of unequal exchange. Some of the literature uses the term "unequal exchange"
interchangeably for both the process and the quantity.
4. AMIN's CONCEPT OF "SUPEREXPLOITATION"
In addition to the expressions "transfer value" and "unequal exchange",
Amin also uses the term "superexploitation".
While this expression can be understood in the sense of "superlative
exploitation" or "extreme exploitation", there is more to it than that,
namely, "superexploitation" has also the meaning of "exploitation
superimposed
on exploitation" or "double exploitation". In Amin's usage, superexploitation
does not happen to labour in the center, no matter how exploited they may
be. Superexploitation (double-exploitation) happens to labour in the periphery--namely,
because the labourers in the periphery generate both surplus value (to
the business owners, capitalist class) and global transfer value
(to the rich countries, center countries). Who benefits from the "superexploitation"
of the laborers of the periphery of the world-system? Here Amin lists three
categories of beneficiaries, namely: "(1) the local classes exploiting
them (landowners and local capitalists); (2) the capital that dominates
the whole system -- that of the monopolies; and (3) the workers of the
imperialist centers (or at least some of them)." (Amin 1980: 19) This can
be interpreted in such a way that laborers anywhere (both in the periphery
and the center) generate surplus value; but, in addition, the laborers
of the periphery also generate global transfer value, part of which is
benefiting labour in the center countries via the mechanism of unequal
exchange
5. THE PROBLEMATIQUE
From an orthodox Marxist point of view, "unequal exchange" is not "exploitation",
even though it is exploitation in the common sense of the word. That is
probably one of the reasons why Emmanuel chose a name other than
"exploitation" (namely, "unequal exchange") and why Amin coined yet another
expression, namely "superexploitation", and why others use yet other special
expressions like "world technological rent" (Çakmak 1998) and why
the term "transfer value" comes in handy for purposes of communication.
The exact relationship between "surplus value" and "transfer value" contains
the following problematique: Whereas both concepts refer to value which
is extracted from somebody by somebody, the "somebodies" on the giving
and receiving end are different ontological entities and are overlapping
(not mutually exclusive). When we speak of surplus value, the two entities
are worker and capitalist (at the micro-level) or labour and capital (at
the macro-level) -- i.e., functionally defined roles or classes.
When we speak of transfer value, the two entities, which are referred
to, are periphery country and center country, or, periphery and center
-- i.e., territorially defined entities or entity classes. The categories
"labour and capital" and "center and periphery" are overlapping. As a result,
the value flows in the two types of relationships (surplus value, transfer
value) are also overlapping categories. That requires some clarification.
6. TWO FORMULAE
The problem can be discussed around two formulae. We can define aggregate surplus value, as follows:
SV = Y - W
in words, aggregate surplus value (SV) is the difference between aggregate income of a community (Y) less aggregate wages of a community (W). [Authors disagree about the measurement of Y and W, but let us ignore that for the time being.]
We can define "transfer value", as follows:
T = d*X - X
in words, aggregate transfer value (T) is the difference between the
true value of exports from periphery to center (d*X) less the actually
paid value for the same exports (X). [d is a distortion factor, measuring
undervaluation. This is the formula which I proposed in Köhler 1998a.
Other components of transfer may have to be added in order to capture all
value that is being transferred. But this formula is sufficient for the
present exercise.]
7. A TWO-COUNTRY EXAMPLE
Let's assume that there is a world with only two countries -- namely, country N (for "North", rich) and country S (for "South", poor). Each country has 10 workers and one capitalist entrepreneur.
(a) the GDP of rich country N is 1000 francs
(b) the GDP of poor country S is 1000 yuan
(c) the wage bill W of rich country N is 600 francs (shared by 10 workers)
(d) the wage bill W of poor country S is 600 yuan (shared by 10 workers)
For this example we can calculate aggregate surplus values, as follows:
SV = Y - W, therefore:
(e) SV of country N = 1000 - 600 (francs) = 400 francs
(f) SV of country S = 1000 - 600 (yuan) = 400 yuan
What is the transfer value?
In order to answer that question, we must have additional information.
Let's make the further assumptions that there is international trade
between N and S;
(g) the exchange rate is 5 : 1, namely, 5 yuan = 1 franc
(h) country S exports to N in the amount of 250 yuan
(i) country N exports to S in the amount of 50 francs
(i.e., the trade is balanced, since 250 yuan = 50 francs)
In order to calculate the transfer value, we must have still more information,
namely, is this a fair exchange? If not, how unfair is it? Let us assume
that it is an unequal exchange (unfair trade) and that it is unfair because
the exchange rate is unfair. Let us assume that:
(j) the fair exchange rate would be 1 : 1, namely, 1 yuan = 1 franc
We can now calculate the aggregate transfer value, as follows:
T = d*X - X , therefore:
(k) the distortion factor d is equal to the actual exchange rate divided
by the fair exchange rate, or, (5/1) : (1/1) = 5.0
(l) T (in terms of yuan) = 5*250 - 250 = 1000 yuan [expressed
in undervalued yuan]
(m) T (in terms of francs) = 5*50 - 50 = 200 francs
The example shows that surplus value and transfer value are as different
as apples and oranges. The surplus values (SV) for this situation
are 400 francs and 400 yuan, while the transfer value (T) is either 1000
yuan or 200 francs. [See, lines (e), (f) and (l), (m)]
8. CONCEPTUAL RELATIONSHIP
I stated above that surplus value (SV) refers to a value flow between functionally defined entities/classes (labour, capital), whereas transfer value refers to a value flow between territorially defined entities/classes (periphery, center). When we use the notation "c" for "capital" and (letter) "l" for "labour", then surplus value flows, as follows:
l ---[SV]---> c [flow of surplus value, from labour to capital]
When we use the notation "P" for "periphery" and "C" for "center", then transfer value is a flow, as follows:
P ---[T]----> C [flow of transfer value, from periphery to center]
The categories "capital/labour" and "center/periphery" overlap. We may
want to use the following notations:
lP labour of periphery
cP capital of periphery
lC labour of center
cC capital of center
Given these notations, it can be stated that transfer value T flows, as follows:
from {lp and cP} ----[T]------> to {lC and cC}
in words, transfer value is an aggregate value which is "sent" (lost)
jointly by the inhabitants of territory P (i.e., peripheral labour and
peripheral capital) and is "received" (gained) jointly by the inhabitants
of territory C (i.e., central labour and central capital). Amin is talking
about the fact that the global "labour aristocracy" is benefiting from
Third World labour -- in my notation, that is the portion of T value which
goes to lC. Amin points out that laborers of the Third World are "superexploited"
-- in my notation, that is the idea that lP loses surplus value to cP and,
in
addition, loses a portion of T to the center countries.
DUAL STATUS CLASSES
The above formal notation brings out an interesting aspect, namely,
that there are, in the global pyramid, classes with dual status. In my
simplified formal scheme, there are two classes with no contradictory status
and two classes with contradictory status (dual status), namely:
(1) capital of center (cC) -- receives surplus value SV and
a
portion of transfer value T -- homogenous status as exploiter
(2) labour of periphery (lP)--loses surplus value SV and
a
portion of transfer value T -- homogenous status as exploited
(3) capital of periphery (cP) -- receives surplus value SV and
loses a portion of transfer value T -- dual status
(4) labour of center (lC) -- loses surplus value SV and receives
a portion of transfer value T -- dual status
SUBDIVISION OF TRANSFER VALUE
It follows from these notions that there is an important difference
between surplus value and transfer value, as follows. Surplus value flows,
in theory, from a single class (labour) to a single class (capital). In
contrast, transfer value flows from two classes (lP and cP; labour and
capital of the periphery) to two classes (lC and cC; labour and capital
of the center). We can thus decompose the transfer value T in terms of
either origin or destination, namely:
by origin:
T = TlP + TcP
by destination:
T = TlC + TcC
in words, the aggregate transfer value has two components in terms of
origin, namely, TlP (the portion of transfer value lost by peripheral
labour) and TcP (the portion of transfer value lost by
peripheral capital); and there are two components in terms of destination,
namely, TlC (the portion of transfer value gained by central
labour) and TcC (the portion of transfer value gained by central
capital).
COMBINED GAINS AND LOSSES BY CLASS
The combined gains and losses for each of the four classes, factoring
in both surplus value and transfer value, can now be stated as follows
( SVC = surplus value of center and SVP = surplus value of periphery):
Table 1
:
CLASS
PAYOFFS (gets+/loses-)
(1) capital of center (cC)
+ SVC + TcC
(2) labour of center (lC)
- SVC + TlC
(3) capital of periphery (cP) +SVP -
TcP
(4) labour of periphery (lP) -SVP
- TlP
9. EXAMPLE
The measurement of the various combinations of gains and losses due to SV and T (surplus value, transfer value) is difficult because the T value is based on the assumption that there is an actual (unfair) value and a postulated (fair) value, so that one must think in terms of two valuation systems, the unfair and the fair one. The example which I used above can be further developed to illustrate the various gains and losses, as follows.
Let's express the distribution in terms of the fair values (purchasing power parity values, PPP values) and work with the figures given in the example above. Note that we assumed that the (fair) PPP value of 1 yuan = 1 franc; the (unfair) exchange rate is 5 yuan = 1 franc. In PPP valuation, we have yuan=franc, therefore.
Let's call the two countries N and S together "the world-system" and
use the following notations:
Z = world income = Y south + Y north
Wg = globally aggregated wages
SVg = globally aggregated surplus values
Calculations:
(n) global wages Wg
= 600 + 600 = 1200 PPP francs (yuan)
[from col. c,d]
(o) global surplus value SVg = 400 + 400 =
800 PPP francs (yuan) [from col. e,f]
(p) world income Z
= 1000 + 1000 = 2000 PPP francs (yuan) [from
col. a,b]
(q) global transfer value T = 200 PPP francs (yuan) [from col. m]
We do not have any firm information about the various components of
the T value (namely, TlP , TcP , TlC
, and TcC). Let us make a further assumption, namely, that these
components are apportioned in the same way as wages and surplus values
(in my example, a 60 : 40 split in both countries and the world). That
leads us to the following situation:
Table 2
COUNTRY NET INCOME (after
transfer value is subtracted/added)
Labour
Capital
Both Classes
South
480
320
800
(600-120) (400-80)
(1000-200)
North
720
480
1200
(600+120) (400+80)
(1000+200)
WORLD
1200
800
2000
Another breakdown of the same figures for each class is:
Table 3
GETS
GIVES
GIVE/GET RATIO
TO OTHERS
Labour South +480
-520
520/480 = 108% (superexploited)
Capital South +320
- 80
80/320 = 25%
Labour North +720
- 400
400/720 = 56%
Capital North +480
0
0/480 = 0%
TOTAL
+ 2000
-1000
(800 SVg + 200 T)
10. GLOBAL EXPLOITATION AND GLOBAL SURPLUS VALUE
The above example uses hypothetical values. I selected a 60 : 40 split
for wages and surplus value in order to have some simple and recognizably
different numbers to work with. Empirical values are to be determined separately.
The same goes for transfer value. That notwithstanding, the example shows
in an interesting way that, at the world-system level, surplus value (SVg,
global surplus value) is an inadequate measure of total global exploitation
(in the common sense of the word). In the example, the total value which
moves upward in the global pyramid is 1000 (composed of 800 for global
surplus value and 200 for global transfer value), which is more than global
surplus value (800 in the example).
11. REFERENCES
Amin, S. (1976) Unequal Development. New York, USA: Monthly Review Press [translated from the 1973 French original]
Amin, Samir (1980) "The Class Structure of the Contemporary Imperialist System", Monthly Review (USA), 31 (1980), 8: 9-26
Çakmak, A. (1998), "living peoples", several memoranda to the internet forum wsn, September 1998, at: http://csf.colorado.edu/mail/wsn
Emmanuel, A. (1972) Unequal Exchange: A Study of the Imperialism of Trade. New York, USA: Monthly Review Press [translated from the 1969 French original] [his first article on "unequal exchange" in 1962, French]
Keynes, J.M. (1964) The General Theory of Employment, Interest, And Money. New York, USA: Harcourt Brace Jovanovich [reprint of the 1936 original]
Köhler, Gernot (1998a), "The Structure of Global Money and World Tables of Unequal Exchange." Journal of World-Systems Research 4: 145-168
Köhler, Gernot (1998b), "Unequal Exchange 1965 - 1995: World Trend and World Tables", World-Systems Archive, Working Papers, /archive/papers/kohlertoc.htm
Moseley, Fred (1991) The Falling Rate of Profit in the Postwar United States Economy. New York, USA: St. Martin's Press
OECD (1995) National Accounts 1960-93. Vol. 1. Main Aggregates.
Raffer, K. (1987) Unequal Exchange and the Evolution of the World System. London, England: MacMillan Press
Shaikh, Anwar (1987) "humbug production function", The
New Palgrave (London, UK: MacMillan), Vol. 2, p. 690-692
12. RELATED ARTICLES
Köhler, Gernot (1999) "A Simulation of Global Exploitation", World-Systems Archive, Working Papers, /archive/papers/kohlertoc.htm
Köhler, Gernot (1999) "Global Keynesianism and Beyond", Journal of World-Systems Research, https://jwsr.ucr.edu/ 5:225-241
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