the_dunk_tank

The world system does not appear to lend itself to formalization in algebraic terms. It is, in fact, made up of segments that appear heterogeneous and even incongruous: groups of capitalist firms producing commodities by means of more or less efficient techniques and employing wage-labor at various rates of real remuneration; zones that seem to be precapitalist, where products, not all of which are marketed, are produced in the setting of various peasant modes, with or without extortion of surplus labor in various forms (ground rent, tribute, and the like); groups of natural resources (minerals), access to which is more or less obstructed, depending on the laws of the states concerned—on whether or not they appropriate the resources. Furthermore, no world economy can be analyzed without considering the states; these exist not only on the plane of political reality but also on the economic plane. The economic exchanges among these states have to balance; there are national monetary systems, some of these are linked with others, and so on.

Any attempt at translating this set of realities into a system of equations seems to be a long shot. Even summing up a system regarded as being close to a pure capitalist mode in a model, whether Marxian (with Department I and Department II expressed in values) or Sraffian, constitutes a simplification that must be surrounded with many precautions.

I do not think, however, that resort to relatively simple schemata must be ruled out. Each of these schemata will possess some value, not merely pedagogic but scientific (even though such value is necessarily limited)—provided that we define precisely what data we are using and realize what these data signify.

Here is an example. One can define a system in which commodities 1…, i…, z are produced, some by means of techniques characterized by material inputs A^c^ and quantities of direct labor L^c^, and others by means of other techniques characterized by inputs A^p^ and quantities L^p^ of labor . This system can be characterized as follows: (a) a single rate of profit r, the only regulator of distribution throughout the system; (b) a single price P^i^ for each product i; (c) two different wage levels W^c^ and W^p^ (W^c^ >W^p^). Certain commodities (l to m) have, under these conditions, a lower price if they are produced with techniques (A^c^ L^c^) , others (n to z) with techniques (A^p^ L^p^) , it being understood that those produced according to the first formula pay the wages W^c^, and the others pay the wages W^p^, and that in every case the capital receives the same reward r.

This system might illustrate (without explaining) the conditions of reproduction (equilibrium between supply and demand and so on) in a model reflecting a certain reality, namely: (a) all products are world commodities (these commodities have only one price—that which is obtained under the conditions that make it the lowest); (b) capital is mobile on the world scale; (c) labor is not mobile, and obtains different rewards at the center and at the periphery. In other words, it is a schematization of the way the production process has been turned into a world process in the imperialist epoch.

A model of this kind can be expressed either in Sraffian terms or in terms of value. It is not a substitute for historical materialism, any more than the schemata in Volume II of Capital are. But it is useful because it makes explicit what seems to be an objective economic law in such a system, and therefore a basis upon which historical materialism can operate.

If we accept the data of the system and try to stay within its framework, we are obliged at the outset to ask three questions. First, why in the peripheral zone do they not combine the techniques (A^c^ L^c^) with the wages W^p^, which would give a higher profit than can be received with the techniques (A^p^ L^p^)? Second, why in this case doesn’t all capital migrate from the center to the periphery? Third, at a given moment, the distribution of techniques being what it is, is the international division of labor that results from it (the center specializing in branches of production l to m, the periphery in n to z) compatible with equilibrium in exchange, since the fractions of products l to m exchanged for products n to z, at prices p^i^, ought to be equal?

Economic theory endeavors to answer these questions, and fails. I have examined the various theories produced to explain the equilibrium of the balances of payments (theories of price effects or exchange effects), have shown the circular character of these arguments (based on the quantity theory of money or on assumptions regarding elasticities of demand that presuppose the result), and have concluded that they amounted to nothing more than an expression of the ideology of universal harmonies. But when economic theory, turning away from these nonsensical notions, speaks of “re-equilibrating” income effects, it hits the nail on the head. By so doing, however, it invites us to ask the real question, which sits outside its own field: how are the structures adjusted to each other—that is, by the effect of what forces does this adjustment take place?(What is involved here are class struggles on the world scale.)

The model illustrates one possible case: the case in which labor is not exploited uniformly—that is, when the rates of surplus-value are unequal. In order to introduce this hypothesis (it is, at this stage, no more than a hypothesis) we need to construct the model in terms of values, rather than directly in price terms.

Unequal exploitation is manifested in unequal exchange. Unequal exploitation (and the unequal exchange that results from it) dictates inequality in the international distribution of labor. It distorts the structure of demand, accelerating self-centered accumulation at the center while hindering dependent, extroverted accumulation in the periphery.