AW: Unequal exchange

Patrick - I should pass on this one to Gernot for a more comprehensive
statement as the main author of the theory. 

However, I should draw your attention to the fascinating work of the British
Euro-sceptic and - you might say - true conservative John Laughland, - who -
however most of us wsn subscribers will disagree with him on most other
issues of economics - keeps on saying in effect that exchange rates under
contemporary capitalism are robbery after the abolition of the gold
standard, and all the more so after the abolition of the gold/$
convertibility. 

Don't stone me for his views and whatever he published in connection with
the Tories under Maggie. As intellectuals we should be able to read what
interesting guys from all quarters write. Think about Stiglitz! John
Laughland's argument is quite interesting, because he also says in effect
that under the old gold standard the fluctuations in the external values of
currencies were much lower. Paper money, he keeps on pounding and referring
to such authors which many of us will consider outer-worldly, as Edmund
Burke, is in effect international robbery (that's my own wsn reading of his
writings). At any rate consider his superb conservative (many of you will
say reactionary, but at any rate fascinating) masterpiece:

The Tainted Source
by John Laughland
</exec/obidos/search-handle-url/index=books&field-author=Laughland%2C%20John
/107-2620925-7856552> 
Paperback (May 2000) 
Trafalgar Square; ISBN: 0751523240 

available at amazon.com/

Also consider in this context Gernot's finding:

Going back a century, what was the magnitude of unequal exchange in the 19th
century? The following quotation provides a preliminary estimate:

"Mandel, Amin, and Arghiri Emmanuel (1972) contend that the core/periphery
relationship altered during the late nineteenth century due to the emergence
in the 1880s of a wage differential between core workers and peripheral
workers. Previous to that, workers in both the core and the periphery had
received subsistence wages, but in the late nineteenth century, due to the
diminishing reserve army of labor in England and because of partial success
of labor struggles there, wages for English workers began to rise above
subsistence. This brought about the "unequal exchange" analyzed by Emmanuel
(1972)..."(Chase-Dunn 1989: 59)

Based on this observation, it may be estimated that unequal exchange prior
to 1880 may have been equal to zero (null). When we use this observation as
an estimate for unequal exchange in 1865, we can construct an historical
trend, as follows (Table 6):


Table 6 shows an historical "explosion" of unequal exchange over the last
three decades from 0.9% of world GDP to 6.6% of world GDP. 



I will finish by saying that you guys should all start seriously to look at 

http://csf.colorado.edu/wsystems/archive/papers.htm
<http://csf.colorado.edu/wsystems/archive/papers.htm> 


where all this has been begun to be debated already.

Kindest regards


Arno Tausch

        ----------
        Von:  Patrick Bond [SMTP:pbond@wn.apc.org]
        Gesendet:  Freitag, 2. März 2001 14:09
        An:  Tausch, Arno
        Cc:  'wsn@csf.colorado.edu'; bond.p@mgmt.wits.ac.za
        Betreff:  Re: Unequal exchange

        Great stuff, Arno. Where, however, do you factor in specific
exchange 
        rate policies aimed at overvaluing or undervaluing a currency? E.g.,

        in Zimbabwe now, there is a huge debate about whether the Zimdollar 
        is over or undervalued, with parallel rates at Z$80/US$1, but 
        official still steady (for last six months) at Z$55/US$1 (Zim's 
        inflation is roughly 65% over that period). There's tight control 
        over forex which explains the ability to peg. But in last week's
main 
        business rag, the finance minister (a bourgeois guy, well respected)

        claimed the Zimdollar is overvalued and it's only speculators
pulling 
        the black market price way down. If it's as easy to get these kind
of 
        distortions and deviations from "value" (whatEVER the hell that 
        means! -- and who after all has ever found out scientifically!) in 
        wee (relatively defenseless) Zimbabwe, I wonder about countries that

        are regular victims of speculative attacks.

        Here in South Africa, for instance, we've suffered three crashes of 
        the Rand (of 25% in nominal terms, over a few weeks or months) in 
        spite of single-digit inflation, since exchange controls were lifted

        in 1995.

        So, the enormous fluctuations makes me wary of too much reliance on
a 
        single exchange-rate indicator of unequal exchange. It's much too 
        much a factor of policy and of speculation to be scientific, I would

        guess.

        But am I wrong somewhere here, or do you have sufficiently lengthy 
        time series to wash out my objections??

        Cheers,
        Patrick