The Debate Behind the Debate: Is the Exploitation of the Global South by the Global North the Main Contradiction of our Time?

When it comes to debates among Marxist intellectuals, it is often difficult to separate the wheat from the chaff. Some of the more arcane disputes have absolutely no bearing on Marxist practice-- the actual class struggle. 

The so-called “Transformation problem” debated among political economists, for example, is not a problem, unless you accept the assumptions that graduate students in economics departments are told must be attended if Marxism is to be taken seriously. Marxism, however, advances a powerful, effective critique of capitalism without accepting those assumptions or deferring to the manufactured problem. Failure to deduct fluctuating prices from exchange values no more derails the Marxist project than failure to deduct actual thought from brain events or neural processes derails the scientific project of neurophysiology.  

But the outcomes of some “theoretical” debates have real practical consequences. Still others are stalking horses for controversies within our political movements.

A recent dust-up between Vivek Chibber and Vijay Prashad is an example of both, along with a heavy dose of pettifoggery.  

Chibber spurred the debate with an interview posted in Jacobin magazine in mid-December. His thesis-- set out explicitly in the interview’s title-- is: “Colonial Plunder Didn’t Create Capitalism.” To the query of whether “colonial plunder was essentially responsible for bringing about capitalism,” Chibber responds with characteristic bluntness: “The idea that capitalism was brought about by plunder can’t even get off the ground.” 

In March, Vijay Prashad responded sharply to Chibber in a long piece in Monthly Review. After chastising Chibber for not being serious: “It would have been better if Chibber wanted to initiate a discussion on the issues of the origin of capitalism and the role of colonialism for this origin to have produced something other than a podcast as an incitement to debate…” He regrets that Chibber’s thoughts were not presented “as a major written text with citations.” 

This would appear to be a specious charge, coming from an intellectual whose stature and broad appeal come largely from podcasts, interviews, and popular writing, and not from his academic work.

Further, Prashad unabashedly concedes in his article that “No serious scholar says that colonialism created capitalism.”

With that concession, the contest would appear to be closed-- there really is no disagreement. Anyone innocent of the often-acrimonious debates on the left would wonder why there was a dispute at all.

Why does Chibber feel it necessary to deny that colonial plunder created capitalism? Is “colonialism-created-capitalism” a straw man? If Prashad is right and no serious scholar believes it, who is Chibber’s argument directed towards? Why is Prashad so agitated by Chibber’s intervention?

Is this another instance of seminar-room Marxism? Of résumé padding? Of dispute-for-dispute’s-sake?

In fact, there is a seething backstory to both positions--- a long, contentious ideological battle that erupts frequently on the academic stage.

Chibber takes issue with a left trend prevalent among many Marxists to locate the nexus of exploitation in national inequalities, specifically between the most advanced capitalist countries and the less developed countries. He says:

In the 1960s and ’70s, it had come back in the form of what’s called “Third Worldism,” which was this idea that the Global North collectively exploits the Global South. And you can see how that’s an extension of the view that capitalism in the West came out of the plunder of the Global South. You can just extend it to say that the Global North continues to stay rich because of the plunder of the South…

It’s transforming a class argument into a racial and national argument. And in today’s left, nationalism and racialism are the dominant ideologies. It’s quite striking to me how this trope, this “global white supremacy” has become so current on the Left. And it’s utterly nonsensical. It has literally no connection to reality.

But it’s become fashionable on the Left because it allows you to align radicalism with the current wave of racial identity politics. And the core of this is whatever divisions there might be within the races, pale — no pun intended — in relation to the divisions between the races.

In essence, Chibber believes that he is defending class analysis against a left that has abandoned class, a left viewing global oppression only through the lens of nationalism and racialism. 

Writers like Prashad frame the principal contradiction in today’s world as between the “Global North” and the “Global South,” abstractions constructed from a rough division of the world between the former colonizing states and the post-colonial states.

The appeal of the Global North versus Global South analysis should be readily apparent. Since well before the birth of capitalism, powerful empires have subjected, exploited, oppressed, and enslaved peoples to the benefit of the empires. In the pre-industrial mercantile era, principalities, city-states, kingdoms, and other centers of power continued to extract wealth from those unable to resist. And soon after the maturation of capitalism and the full development of the modern nation-state, the monopoly capitalist corporations of the great powers continued the subjugation, pillage, plunder, and rape of weaker peoples through the colonial system.

There is nothing new or original, however, in affirming that powerful nations, organizations, institutions, groups, individuals, etc. periodically or even systemically exploit their weaker counterparts. There is nothing new or especially insightful about recognizing asymmetries of power in global relations. Certainly, there is nothing specifically Marxist about such a claim.

But Prashad wants to go further. He wants to specifically link nation-states to capitalist exploitation. Where the Marxism of Marx and Engels fundamentally located exploitation in the relationship between those who own the means of production and workers-- two distinct classes-- Prashad sees exploitation as a relationship between nation-states: the original colonizing states and the colonial subjects. And today, he and others argue that exploitation remains fundamentally grounded in the relations of nation-states: the privileged former colonizers and the former colonies. Granting that inequalities are certainly, at least in part, the legacy of colonialism, the fact that national inequalities exist today further demonstrates that this exploitative relationship exists, according to Prashad and others of like mind.

Prashad cites counterfactual studies-- identifying where wealth might have gone if events had taken a different course-- as further showing that exploitive relations account for the continuing inequalities between South and North, without mentioning the relations of production-- capitalism-- that actually enable these inequalities. Class relations-- relations privileging exploitative advantages of the foreign and domestic bourgeoisies-- go unmentioned. Do we conclude, by comparison, that the US North exploits the US South based on the existence of persisting inequalities? Or do we say that-- due to uneven, disparate development-- corporate capitalism exploits them both, but differently? I think we agree it’s the latter.

Paradoxically, Prashad says:

This ceaseless drain provides a continuous stream of plunder into the Western-controlled financial systems whose power remains intact despite the great changes taking place with the center of gravity of the world economy shifting to Asia.

This curious statement suggests that the global North is systematically plundering the global South, while the weight of the global economy-- its future and fortunes-- lie in Asia, the economic powerhouse of the Global South. How can he have it both ways? How can Prashad and others celebrate the fact that the core of the South-- the BRICS+ countries-- have together surpassed the economic product of the G7 and also maintain that the North continues to systematically plunder its wealth?

The fact is that capitalist social relations-- struggle between classes over the fruits of labor-- have entirely penetrated both the Global North and Global South. It is monopoly corporations-- social entities that respect no state boundaries-- that “plunder” anywhere and everywhere.

 Rather than uncritically submitting its fate to the direction of international capitalist institutions, their loans, or foreign investment, rather than seek some compensatory justice to the crimes of colonialism, the post-colonial states should consider the insights argued by Paul Baran in his opus at the height of the colonial independence movement:

The principal insights, which must not be obscured by matters of secondary or tertiary importance, are two. The first is that, if what is sought is rapid economic development, comprehensive economic planning is indispensable… The second insight of crucial importance is that no planning worth the name is possible in a society in which the means of production remain under the control of private interests which administer them with a view to their owners’ maximum profits (or security or other private advantage) ... (xxviii-xxix, Foreword to 1962 printing) The Political Economy of Growth, Paul A. Baran [emphasis added]

Baran is unabashedly advocating for a socialist escape from the legacy of colonialism and the fate of neocolonialism-- a position that has fallen out of fashion, but remains the only authentically Marxist answer for workers in the so-called global South. As an ideological godfather of many who stress the North/South exploitation divide, it is odd that this conclusion is rarely cited by those who owe their lineage to Baran.

Neither Prashad nor Chibber acknowledge this solution. Prashad, citing Samir Amin, mischaracterizes contemporary imperialism:

In the Marxist tradition, there are a variety of interpretations of the idea of originary accumulation, but what the facts show—and has been established in, for example, the oeuvre of Samir Amin, among others—is that imperialism is not an outgrowth of capitalism, but is foundational to capitalism itself. [emphasis added]

Today’s imperialism is driven by protecting and expanding spheres of influence, energy and rare metal acquisition, market access and expansion, and dominating labor markets. Behind the endless Great Power conflicts, civil wars, and regime changes is inescapably capitalist competition. 

Capitalism is foundational to imperialism itself. And if we lose sight of that fact-- the class perspective-- we will lose sight of who are the perpetrators and who are the victims.

But class alone does not explain exploitation and imperialism, as one might think from reading Chibber. Nationalism and racialism have always been capable tools in misguiding, thwarting, or taming class struggle. Capitalism’s long life and resilience owes much to the insidious, but masterful manipulation of race and nationhood by the capitalist class to deflect attention from the war between the class exploiters and the exploited. Deafness and insensitivity to race and national identity only exacerbates and multiplies the harsh lash of class exploitation.

Debate is most useful when it shines a light on the way forward.

Greg Godels

zzsblogml@gmail.com

Mr. Ip and the Wall Street Journal Discover Wealth Inequality

It was in 2013 that Thomas Piketty rediscovered the problem of wealth inequality with his celebrated book Capital in the Twenty-first Century. Published by Harvard University Press and selling several million copies, the book turned prevailing mainstream economic thinking on its head. Academic economists and capitalist apologists had long assured us that capitalism persistently created wealth and distributed it fairly to all the factors of production, with deviations from this fair distribution attributable to unusual or exceptional intervention in the process.

But Piketty’s look at all the available, relevant data showed just the opposite: capitalism-- absent any external or exceptional circumstances-- invariably generated growing inequality. Using sources dating to the eighteenth century, Piketty showed that, with the exception of the destruction of capital or the rare active measures to redistribute it, wealth inequality was bound to grow. Piketty offered no deep explanation of why this is a feature of capitalism, but he did offer the usual social democratic panacea-- tax the rich!

Coming only four years after the steepest economic downturn since the Great Depression, Piketty’s opus was well received by a wide audience. As a consequence, one might think that the idea of overthrowing the system responsible for more than two centuries of growing inequality would accordingly enter the popular conversation.

But it was not to be. Though a new gilded age of conspicuous consumption, new manifestations of privilege, and raging demand for luxury emerged, no serious threat to the capitalist system sprung forth. Anger was contained effectively in the US by a rotten, corrupt two-party system. Fear and a deeply ingrained hostility to socialism gripped older generations. And younger people-- facing a desperate future-- were open to an alternative to capitalism, but saw no clear road for it.

Now, thirteen years later, The Wall Street Journal’s top economic commentator, Greg Ip, has again rediscovered inequality. He writes about today’s economy:

Its rewards are going disproportionately toward capital instead of labor. Profits have soared since the pandemic, and the market value attached to those profits even more. The result: Capital, which includes businesses, shareholders and superstar employees, is triumphant, while the average worker ekes out marginal gains.

The divergence between capital and labor helps explain the disconnect between a buoyant economy and pessimistic households. It will also play an outsize role in where the economy goes from here.

The brute financial force of all that wealth means market fluctuations, like last week’s, matter more for consumer spending. Meanwhile, artificial intelligence could funnel even more of economic output toward capital instead of labor. Last week may be a taste. Amid reports that layoffs are climbing and job openings plunging, especially for professionals exposed to AI, the Dow Jones Industrial Average closed above 50000 for the first time…

The shift to capital from labor has actually been under way for more than 40 years. Labor received 58% of the total proceeds of economic output, as measured by gross domestic income (conceptually similar to GDP), in 1980. By the third quarter of last year that had plummeted to 51.4%. Profits’ share, meanwhile, rose from 7% to 11.7%.

Ip’s charts show that S&P 500 profit margins have doubled over the last 15 years, with corporate profits rising 43% since the end of 2019.

Where Ip tells us that this is an alarming trend over the last 40 years, Piketty tells us that growth in inequality is the long-term trajectory of the capitalist economy. Both are right.

What is disconcerting is that the victims of this trend, the vast mass of working people, have no voice, no representation, no program to address this inevitable-- if we are to believe Piketty-- consequence of a capitalist system.

What is even more disconcerting is that voices on the left that purport to advocate for working people offer such unimaginative, weak alternatives.

Now Ip only raises the specter of growing inequality to alert ruling circles of the danger that the masses will sharpen their pitchforks and rebel against the privileges of capital. Piketty proposes redistributing wealth through mechanisms-- like taxation-- that the system controls with its most loyal agents. The idea that bourgeois political parties will substantially tax the bourgeoisie is truly fantastic. 

Unions-- one of the few remaining mass organizations supporting workers-- offer a poor record of staunching the flow of wealth to capital, even in industries where unions are well represented and strong. And union leaders seldom have any vision beyond that offered by center-left parties. 

Sadly, too many of the left’s public intellectuals are mired in side shows: cooperatives as an answer to international monopolies, romanticizing the capitalist order existing before Thatcher and Reagan, or cheering on an abstract “global south” bringing capitalism to its knees. 

Others paint a dire picture of wealth being cannibalized by a cabal of rentiers, scorning the Marxist theory of bourgeois and exploited proletariat. This novelty finds currency in the fashionable, but deeply incoherent idea of “technofeudalism.”

Missing from these distractive theories is any understanding of capitalism’s fundamental logic: the contradiction between workers and capital. Oddly enough, a capitalist apologist, a conservative writer, Greg Ip, understands this contradiction all too well in his observations about growing inequality, as does Piketty in his writings. 

For many of those offering their thoughts to working people, the working class is inconsequential or decimated by deindustrialization in their relatively small part of the world (typically, English speaking or Eurocentric). As a result, they spin arcane theories of inequality or oppressions. They overlook the reality that there are over a billion and a half workers in Asia alone, most of whom are working under conditions of capitalist exploitation as described by Karl Marx and Frederick Engels. They have forgotten that while industry has shifted globally, while there is a constant change in the global division of labor, the material wealth is still created by working people. 

The mobility of production and the division of labor are permanent features of capitalism that have only accelerated in recent decades. New technologies and industries have sprung up, where older technologies and industries migrated to areas of cheaper labor. A country like the United States is hollowing out, with a diminishing manufacturing sector, but a high-value, high-income technology sector at one level and a precarious, lower-income service sector at another level. Workers at all levels in all countries where capital employs labor are exploited by capital. 

The lengths to which so many supposed leftists go to ignore or deny the fundamental relationship between workers and capitalists-- the ultimate cause of growing inequalities-- is startling. The dawn of the industrial age gave new meaning to the word “exploitation.” Marx and Engels refined that meaning, giving it a rigorous role at the center of their analysis. And it remains essential to our understanding of the world today.  

Workers are exploited.

Reformers seek to blunt exploitation’s sting.

Revolutionaries act to eliminate it.

Greg Godels

zzsblogml@gmail.com

Globalization, its Demise, and its Consequences

There is very, very much to like about the recent (3-24-2025) article in Jacobin by Branko Milanović entitled What Comes After Globalization?

First, Milanović explores historical comparisons between the late-nineteenth-century expansion of global markets and trade (what he calls Globalization I and dates from 1870 to 1914) and the globalization of our time (what he calls Globalization II and dates from 1989 to 2020). The search for and exposure of historical patterns are the first steps in scientific inquiry, what Marxists mean by historical materialist analysis. 

Unfortunately, many writers-- including on the left-- take the more recent participation of new and newly engaged producers and global traders, a revolution in logistics, the success of free-trade politics, and the subsequent explosion of international exchange as signaling the arrival of a new, unique capitalist era, even a new stage in its evolution. 

Recognizing a growing share of trade in global output, but burdened with a limited historical horizon (the end of the Second World War), left theorists drew unwarranted, speculative conclusions about a new stage of capitalism featuring a decline in the power of the nation state, the irreversible domination of “transnational capital,” and even the coming of a borderless “empire” contested by an amorphous “multitude.”

Countering these views, writers like Linda Weiss (The Myth of the Powerless State, 1998) and Charles Emmerson (1913: In Search of the World Before the Great War, 2013) bring some sobriety to the question and remind us that we have seen the explosive growth of world trade before, generated by many of the same or similar historic forces. Weiss tells us that “the ratios of export trade to GDP were consistently higher in 1913 than they were in 1973.” Noting the same historical facts, Emmerson wryly concludes “Plus ça change”.

Milanović’s recognition of this parallel between two historic moments gives his analysis a gravitas missing from many leftists, many self-styled Marxist interpretations of the globalization phenomenon.

Secondly, Milanović-- an acknowledged expert in comparative economic inequality-- makes an important observation regarding the asymmetry between Globalization I and II. While they are alike in many ways, they differ in one important, significant way: while Globalization I benefited the Great Powers at the expense of the colonial world, the workers in the former colonies were actually benefited by Globalization II. In Milanović’s words: 

Replacing domestic labor with cheap foreign labor made the owners of capital and the entrepreneurs of the Global North much richer. It also made it possible for the workers of the Global South to get higher-paying jobs and escape chronic underemployment…  It is therefore not a surprise that the Global North became deindustrialized, not solely as the result of automation and the increasing importance in services in national output overall, but also due to the fact that lots of industrial activity went to places where it could be done more cheaply. It’s no wonder that East Asia became the new workshop of the world.

While he misleadingly uses the expression “coalition of interests,” Milanović elaborates:

This particular coalition of interests was overlooked in the original thinking regarding globalization. In fact, it was believed that globalization would be bad for the large laboring masses of the Global South — that they would be exploited even more than before. Many people perhaps made this mistake based on the developments of Globalization I, which indeed led to the deindustrialization of India and the impoverishment of the populations of China and Africa. During this era, China was all but ruled by foreign merchants, and in Africa farmers lost control over land — toiled in common since time immemorial. Landlessness made them even poorer. So the first globalization indeed had a very negative effect on most of the Global South. But that was not the case in Globalization II, when wages and employment for large parts of the Global South improved.

Milanović makes an important point, though it risks exaggeration by his insistence that because Globalization II brought a higher GDP per worker, the workers are better off and exploited less. 

They may well be better off in many ways, but they are likely exploited more.

Because he forgoes a rigorous class analysis, he assumes that gain in GDP per worker goes automatically to the worker. Most of it surely does not; if it did, capital would not have shifted to the Global South. Instead, most of the GDP per capita goes to the capitalist-- foreign or domestic. Capital would not migrate to the former colonies if it garnered a lower rate of exploitation.

But engagement with manufacturing in Globalization II, rather than resource extraction or handicraft, certainly provides workers in the former colonies with greater employment, better wages, and more opportunity to parlay their labor power into a more advantageous position-- a fact that nearly all development theorists from right to left should concede.

Structural changes in capitalism-- the rapid mobility and ease of mobility of capital, the opening of new lower wage markets, a revolution in the means and costs of transportation-- have shifted manufacturing and its potential benefits for workers from its location in richer countries to a new location in poorer countries, creating a new leveling between workers in the North and South. 

Denying or neglecting this reality has led many leftists-- like John Bellamy Foster-- to support the “labor aristocracy” thesis as a reason to ignore or demean the potentially militant role of workers in the advanced capitalist countries. As one of the strongest voices in support of the revolutionary potential of the colonial workers and peasants, Lenin was scathingly critical of elements of the working class who were indirectly privileged by the wealth accumulated from the exploitation of the colonies. Those “labor aristocrats” constituted an ideological damper on the class politics of Lenin’s time (and even today), but by no means gave a reason to deny the class’s revolutionary potential. Certainly, the ruling classes of the Great Powers employed that relative privilege and many other ploys to further exploit their domestic workers to the fullest extent and discourage their rebellion.

Bellamy and others want to deny the revolutionary potential of the workers in the advanced capitalist countries in order to support the proposition that the principal contradiction today is between the US, Europe, and Japan and the countries of the Global South. Bellamy endorses the Monthly Review position taken as far back as the early 1960s: “Some Marxist theorists in the West took the position, most clearly enunciated by Sweezy, that revolution, and with it, the revolutionary proletariat and the proper focus of Marxist theory, had shifted to the third world or the Global South.” 

While frustration with the lack of working-class militancy (worldwide) is understandable and widespread, it does not change the dynamics of revolutionary change-- the decisive role of workers in replacing the existing socio-economic system. Nor does it dismiss the obligation to stand with the workers, the peasants, the unemployed, and the déclassé wherever they may be-- within either the Great Powers or the former colonies.

Just as revolutionary-pessimism fostered the romance of third-world revolution among Western left-wing intellectuals in the 1960s, today it is the foundation for another romantic notion-- multipolarity as the rebellion of the Global South. Like its Cold War version, it sees a contradiction between former colonies and the Great Powers of our time as superseding the contradiction between powerful monopoly corporations and the people. 

Of course, richer capitalist states and their ruling classes do all they can to protect or expand any advantages they may enjoy over other states-- rich or poor-- including economic advantages. But for the workers of rich or poor states, the decisive question is not a question of sovereignty, not a question of defending their national bourgeoisie, or their elites, but of ending exploitation, of combatting capital. 

The outcome of the global competition between Asian or South American countries and their richer Western counterparts over market share or the division of surplus value has no necessary connection with the well-being of workers in the sweatshops of the various rivals. This is a fact that many Western academics seem to miss.  

Thirdly, Milanović clearly sees the demise of Globalization II-- the globalization of our time:

The international wave of globalization that began over thirty years ago is at its close. Recent years have seen increased tariffs from the United States and the European Union; the creation of trade blocs; strong limits on the transfer of technology to China, Russia, Iran, and other “unfriendly” countries; the use of economic coercion, including import bans and financial sanctions; severe restrictions on immigration; and, finally, industrial policies with the implied subsidization of domestic producers.

Again, he is right, though he fails to acknowledge the economic logic behind the origins of Globalization II, the conditions leading to its demise, and the forces shaping the post-globalization era. For Milanović, globalization's end comes from policy decisions-- not policy decisions forced on political actors-- but simply policy preferences: “Trump fits that mold almost perfectly. He loves mercantilism and sees foreign economic policy as a tool to extract all kinds of concessions…” Thus, Trump’s disposition “explains” the new economic regimen; we need to look no deeper.

But Trump did not end globalization. The 2007-2009 economic crisis did. 

Globalization was propelled by neoliberal restructuring combined with the flood of cheap labor entering the global market from the “opening” of the People’s Republic of China and the collapse of Eastern Europe and the USSR. Cheaper labor power means higher profits, everything else being the same.

With the subsequent orgy of overaccumulation and capital running wildly looking for even the most outlandish investment opportunities, it was almost inevitable that the economy would crash and burn from unfettered speculation.

And when it did in 2007-2009, it took trade growth with it and marked “paid” on globalization.

As I wrote in 2008:

 As with the Great Depression, the economic crisis strikes different economies in different ways. Despite efforts to integrate the world economies, the international division of labor and the differing levels of development foreclose a unified solution to economic distress. The weak efforts at joint action, the conferences, the summits, etc. cannot succeed simply because every nation has different interests and problems, a condition that will only become more acute as the crisis mounts…

“Centrifugal forces” generated by self-preservation were operant, pulling apart existing alliances, blocs, joint institutions, and common solutions. Trade agreements, international organizations, regulatory systems, and trust greased the wheels of global trade; distrust, competition, and a determination to push economic problems on others threw sand on those wheels. 

Anticipating the period after the demise of globalization, I wrote in April of 2009:

To simplify greatly, a healthy, expanding capitalist order tends to promote intervals of global cooperation enforced by a hegemonic power and trade expansion, while a wounded, shrinking capitalist order tends towards autarky and economic nationalism. The Great Depression was a clear example of heightened nationalism and economic self-absorption. 

The aftermath of the 2007-2009 Great Recession was one such example of “a wounded, shrinking capitalist order.”  And predictably, autarky and economic nationalism followed.

The tendency was exacerbated by the European debt crisis that drove a wedge between the European Union’s wealthier North and the poorer South. Similarly, Brexit was an example of the tendency to go it alone, substituting competition for cooperation. Ruling classes replaced “win-win” with zero-sum thinking.

The pace and intensity of international trade has never recovered. 

While Milanović does not attend to it, this cycle of capitalist expansion, economic crisis, followed by economic nationalism (and often, war) recurs periodically. 

In the late-nineteenth century, the global economy saw a vast restructuring of capitalism, with new technologies and rising productivity (and concomitant rises in rates of exploitation).The era also saw what economists cite as “a world-wide price and economic recession” from 1873 to 1879 (the Long Depression). In its wake, protectionism and trade wars broke out as everyone tried to dispose of their cheaper goods in other countries, only to be met with tariff barriers. 

The imperialist “scramble for Africa” -- so powerfully described by John Hobson and V. I. Lenin-- raised the intensity of international competition and rivalry, while generating the foundation for economic growth and global trade with newly acquired colonies. This is the period that Milanović characterizes as Globalization I. A further aspect and stimulus of the rebirth of growth and trade was the massive armament programs mounted by the Great Powers. The unprecedented armament race-- the “Dreadnought race” -- served as an engine of growth, while exponentially increasing the danger of war (from 1880 to 1914 armament spending in Germany increased six-fold, in Russia three-fold, in Britain three-fold, in France double, source: The Bloody Trail of Imperialism, Eddie Glackin, 2015).

One could argue, similarly, that the 1930s were a period of depression and economic nationalism, following a broad, exuberant economic expansion. And as with the pre-World War I Globalization I, the contradictions were resolved with World War.

Is War our Destiny after the Demise of Globalization II? 

Certainly, the historical parallels cited above suggest that wars often follow pronounced economic disruptions and the consequent rise of economic nationalism, though we must remember that events do not follow a mechanical pattern.

Yet if history is a great teacher, it certainly looks like the mounting contradictions of today’s capitalism point to intensifying rivalry and conflict. A March 24 Wall Street Journal headline screams: Trade War Explodes Across World at a Pace Not Seen in Decades!  

The article notes that the infamous Smoot-Hawley (tariff) Act of 1930-- a response to the Great Depression-- was only rescinded after the war.

It also notes-- correctly-- that tariffs are not simply a Trump initiative. As of March 1, the Group of 20 have imposed 4500 import restrictions-- up 75% since 2016 and increased 10-fold since 2008.

The World Trade Organization, responsible for organizing Globalization II has failed its calling. As the WSJ reports:

In February, South Korea and Vietnam imposed stiff new penalties on imports of Chinese steel following complaints from local producers about a surge of cut-price competition. Similarly, Mexico has begun an antidumping probe into Chinese chemicals and plastic sheets, while Indonesia is readying new duties on nylon used in packaging imported from China and other countries. 

Even sanctions-hit Russia is seeking to stem an influx of Chinese cars, despite warm relations between Russian President Vladimir Putin and Chinese leader Xi Jinping. Russia in recent weeks increased a tax on disposing of imported vehicles, effectively jacking up their cost. More than half of newly sold vehicles in Russia are Chinese-made, compared with less than 10% before its 2022 invasion of Ukraine.

As tensions mount on the trade front, rearmament and political tensions are growing. War talk mounts and the means of destruction become more effective and greater in number. The US alone accounts for 43% of military exports worldwide, up from 35% in 2020. France is now the number two arms exporter, surpassing Russia. And, in over a decade, NATO has more than doubled the value of weapons imported. 

European defense spending is expanding at rates unseen since the Cold War, in some cases since World War II. According to the BBC, “On 4 March European Commission President Ursula Von der Leyen announced plans for an €800bn defence fund called The ReArm Europe Fund.”  Germany has eliminated all restraints on military spending in its budget. Likewise, the UK plans to increase military spending to 2.5% of GDP in the next two years, while Denmark is aiming for 3% of GDP in the same period (growth rates consistent with those of the Great Powers before World War I, except for Germany).

Dangerously, centrist politicians in the EU are beginning to see rising military spending as a boost to a stuttering economy. As military Keynesianism takes hold, the possibility of global war increases, especially in light of the shifting alliances in the proxy war in Ukraine.

Even more ominously, Europe’s two nuclear powers-- France and the UK-- are seriously discussing the development of a European nuclear force independent of the US-controlled NATO nuclear capability.

At the same time, the incoming chair of the US Joint Chiefs of Staff announced readiness to supply more NATO powers with a nuclear capacity.

As war cries intensify, the EU Commission has issued a guidance that EU citizens should maintain 72 hours of emergency supplies to meet looming war dangers.

Of course, the continually escalating wave of tariffs, sanctions, and hostile words directed at The People's Republic of China by the US and its allies threatens to break into open conflict and wider war, a war for which the PRC is quite understandably actively preparing. 

As with previous World Wars, it is not so much-- at this moment-- who is right or wrong, but when the momentum toward war will become irreversible. Another imperialist war-- for, in essence, that is what it would be-- will be an unimaginable disaster. No issue is more vital to our survival than stopping this momentum toward global war.

Greg Godels

zzsblogml@gmail.com

A Return to Basics: Rasmus, the “Neoliberal” Turn, and Exploitation

Instead of the conservative motto, 'A fair day's wage for a fair day's work!' they ought to inscribe on their banner the revolutionary watchword: 'Abolition of the wage system!' Karl Marx, Value, Price, and Profit

Today, the point that Marx made in his 1865 address to the First International Working Men’s Association is largely lost on the trade unions and even with many self-styled Marxists. The distinction between the goal of “a fair day's wage” and the goal of eliminating exploitation-- the wage system embedded in capitalism-- is lost before a common, but unfocused revulsion to the exploding growth of inequality. It is one thing to deplore the growth of inequality, it is quite another to establish what would replace the logic of unfettered accumulation.

Marx offered no guidelines for a “fair wage”. Indeed, his analysis of capitalism made no significant use of the concept of fairness. Instead, he made the concept of exploitation central to his political economy. He used the concept in two ways: First, he employed “exploitation” in the popular sense of “taking advantage of” -- the sense that the capitalist takes advantage of the worker. “Exploitation of man by man” was a nascent concept, arriving in discourse with the expansion of mass industrial employment and borrowed from an earlier, morally-neutral usage regarding the exploitation of non-humans. Its etymology, in that sense, arises in the late eighteenth century.

Marx also uses the word in a more rigorous sense: as a description of the interaction of the worker and the capitalist in the process of commodity production. Even more rigorously, it appears in political economic tracts like Capital as a ratio between the axiomatic concepts of surplus value and variable capital.

As a worker-friendly concept, exploitation is most readily grasped by workers in the basic industries, especially in extractive and raw-material industries. Historically, an early twentieth century coal miner-- bringing the tools of extraction with him, responsible for his own safety while risking a more likely death than a war-time soldier, and accepting the “privilege” of going into a cold, damp hole to dig coal for someone else’s profit-- intuitively understood exploitation. A reflective miner would recoil from the fact that ownership of a property could somehow-- apart from any other consideration-- confer to someone the right to profit from a commodity that someone else had faced mortal danger to extract from the earth. What is a “fair day’s wage” in such a circumstance?

Organically, from its intuitive understanding by workers, and theoretically, from class-partisan intellectuals like Marx and Engels, as well as their rivals like Bakunin, exploitation became the central idea behind anti-capitalism and socialism.

Today, most workers’ connection to the exploitation relation appears far removed from the direct relation of a coal miner to the coal face and to the owner of the coal mine. The immediacy of labor and labor’s product in extraction is often of many removes in service-sector or white-collar jobs. Moreover, the division of labor blurs the contribution of the individual’s efforts to the final product.

Well into the twentieth century, “labor exploitation” fell out of the lexicon of the left, especially in the more advanced capitalist countries, where Marx thought that it would be of most use. Left thinkers, as well as Marxists, rightly attended to the colonial question, focusing on the struggle for independence and sovereignty; they were discouraged by the tendency for class-collaboration in many leading working-class organizations; Communist Parties correctly felt a primary duty to defend the gains of the socialist and socialist-oriented countries; and the fight for peace was always a paramount concern.

Exploitation was attacked from the academy. The Humanist “Marxist” school trivialized the exploitation nexus to a species of the broad, amorphous concept of alienation. The Analytical “Marxist” school congratulated itself by proving that given an inequality of assets, a community of exchange-oriented actors would produce and reproduce inequality of assets, a proof altogether irrelevant to the concept of exploitation, which the school promised to clarify. Both schools influenced a retreat from Marxism in the university, followed by a stampede after the collapse of the Soviet Union.

Liberal and social-democratic theory revisits the “fair day's wage” with the explosion of income inequality and wealth inequality of the last decades of the twentieth century that was too impossible to ignore. But what is a “fair wage”? What level of income or wealth distribution is just, fair, socially responsible, or socially beneficial? The questions are largely unanswerable, if not incoherent. 

Thanks to the empirical, long-term study of inequality shared in Thomas Piketty’s Capital in the Twenty-first Century, we learn that capitalism’s historical tendency has been to always produce and reproduce income and wealth inequality, a conclusion sobering to those who hope to refashion capitalism into an egalitarian system and making a “fair wage” even more elusive. Piketty’s work offers no clue to what could constitute a “fair wage.”

Others point to the productivity-pay gap that emerged in the 1970s, where wage growth and productivity took entirely different courses at the expense of wage gains. Researchers who perceptively point to this gap as contributing to the growth of inequality often harken back to the immediate postwar era, when productivity growth and wage growth were somewhat in step, when the gains of productivity were “shared” between capital and labor. But what is magical about sharing? Why shouldn't labor get 75% or 85% of the gain? Or all of the gain? Is maintaining existing inequalities the optimal social goal for the working class?

Where the concept of a “fair wage” offers more questions than answers, Marx’s concept of exploitation suggests a uniquely coherent and direct answer to the persistent and intensifying growth of income and wealth: eliminate labor exploitation! Abolish the wage system!

Thus, the return to the discussion of exploitation is urgent. And that is why a serious and clarifying account of exploitation today is so welcome.

*****

Jack Rasmus takes a step toward that end in a carefully argued, important paper, Labor Exploitation in the Era of the Neoliberal Policy Regime. I have followed Rasmus’s work for many years, especially admiring his respect for the tool of historical inquiry and his scrupulous research, interpretation, and careful use of “official” data. On the other hand, I thought that his work failed to fully consider the Marxist tradition, unduly drawn to engaging with the pettifoggery of academic “Marxists.”

However, his new work proves that assessment to be mistaken. Indeed, his latest work reflects an admirable reading of Marx’s political economy and offers an important tool in the struggle to end the wage system.

Rasmus understands that we are in a distinct era of capitalism, forced by the failure of the prior “policy regime” and typified by several features: intensified global penetration of capital and trade expansion (“globalization”), a massively growing role for financial innovation and notional profits (“financialization”), and most significantly, the restoration and expansion of the rate of profit (“the intensification of labor exploitation in both Absolute and Relative value terms that has occurred from the 1980s to the present”). 

It should be noted that Rasmus does not discuss why a new “policy regime” became necessary in the 1970s. Both the stagflation that proved intractable to the reigning Keynesian paradigm and the attack on the US profit rate by foreign competition (see Robert Brenner, The Economics of Global Turbulence, NLR, 229) necessitated a sea change in the direction of capitalism.

I might add that while so-called globalization was an important feature of “the neoliberal policy regime,” the 2007-2009 economic crisis has diminished the growth of global trade. Indeed, its decline has fostered the rise of economic nationalism, the latest wrinkle on the “neoliberal policy regime.”

Rasmus carefully and methodically documents and explicates the intensification of labor exploitation in commodity production (what he calls “primary exploitation”) over the last fifty years. He recognizes the important and growing role of the state in enabling this intensification. This is, of course, the process that Lenin foresaw with the fusing of the state and monopoly capitalism-- a process associated in Marxist-Leninist theory with the rise of state-monopoly capitalism. Today’s advanced capitalist states fully embrace the goal of defending and advancing the profitability (‘health’) of monopoly corporations (‘a rising tide lifts all boats’), including intensifying labor exploitation.

Just how that intensification is accomplished is the subject of Rasmus’s paper.

*****

Rasmus is aware that Marx expressed the exploitation nexus in terms of labor value. He avoids the scholasticism that side-tracks academically trained economists who obsess over the price/value relationship-- the so-called transformation problem. Value-- specifically a labor theory of value -- is central to Marx because it explains how commodities can command different, non-arbitrary exchange values and how the different proportionalities between the exchange values of commodities are determined. That is the problem Marx sets forth in the first pages of Capital, and value-- as embodied labor-- is the answer that he gives.

Using labor value as his theoretical primitive enables Rasmus to discuss exploitation in Marx’s framework of absolute and relative surplus value-- exploitation by extending the working day or intensifying the production process. While Rasmus offers a persuasive argument that his use of “official” data couched in prices can legitimately be translated into values, it is unnecessary for his thesis. The relations are preserved because the proportionalities are, in general, preserved. It is a reasonable and adequate assumption that prices and values run in parallel, though a weaker claim than that prices can be derived from values.

Methodological considerations aside, Rasmus sets out to show-- and succeeds in showing-- that exploitation has accelerated in the “neoliberal” era in terms of both relative and absolute surplus value:

Capitalism’s Neoliberal era has witnessed a significant intensification and expansion of total exploitation compared to the pre-Neoliberal era. Under Neoliberal Capitalism both the workday (Absolute Surplus Value extraction) has been extended while, at the same time, the productivity of labor has greatly increased (Relative Surplus Value extraction) in terms of both the intensity and the mass of relative surplus value extracted.

Regarding Absolute Surplus Value, he demonstrates: 

[I]t is true the work day was reduced during the first two thirds of the 20th century—by strong unions, union contract terms, and to some extent from government disincentives to extend the work day as a result of the passage of wages and hours legislation. But that trend and scenario toward a shorter work day was halted and rolled back starting in the late 1970s and the neoliberal era. The length of the Work Day has risen—not continued to decline—for full time workers under the Neoliberal Economic Regime.

Through a careful combing and analysis of government data, as well as original arguments, Rasmus shows how capital has succeeded in extending the workday. His discussion of changes in mandatory overtime, in temporary employment, in involuntary part-time employment, in paid leave, in changing work culture, in job classifications, in work from home, internships, and other practices form a persuasive argument for the existence of a trend of the lengthening of the average workday. 

Similarly, Relative Labor Exploitation has accelerated in the “Neoliberal” era, according to Rasmus:

Rising productivity is a key marker for growing exploitation of Labor. If real wages have not risen since the late 1970s but productivity has—and has risen at an even faster rate in recent decades—then the value reflected in business revenues and profits of the increased output from that productivity has accrued almost totally to Capital.

In this regard, the numbers are widely recognized and non-controversial. Labor productivity has grown significantly, while wages have essentially stagnated. Rasmus tells us that it is even worse than it looks:

So, wages have risen only about one-sixth of the productivity increase.  But perhaps only half of that total 13% real hourly wage increase went to the top 5% of the production & nonsupervisory worker group, according to EPI 10 (Economic Policy Institute, February 2020). That means for the median wage production worker, the share of productivity gain was likely 10% or less. The median wage and below production worker consequently received a very small share in wages from productivity over the forty years since 1979. It virtually all accrued to Capital…

According to the US Labor Department, there were 106 million production & nonsupervisory workers at year end 2019—out of the approximately 150 million total nonfarm labor force at that time. Had they entered the labor force around 1982-84, they would have experienced no real wage increase over the four decades.

Rasmus notes that the US maintained the same share of global manufacturing production through the first two decades of the twenty-first century, but doing it with six million fewer workers. This, of course, meant a rising rate of exploitation and a greater share of surplus value for the capitalists. Though the job losses struck especially hard at an important section of the manufacturing working class relegated to unemployment, the remaining workers lost further from concessionary bargaining promoted by a business-union leadership. Thus, they were unable to secure any of the gains accrued by rising productivity. They experienced a higher rate of exploitation.

*****

Demonstrating that labor exploitation has increased in the last 45-50 years in terms of absolute and relative surplus value does not, according to Rasmus, close the book on labor exploitation. Drawing on a suggestive quote in Volume III of Capital, he develops an original theory of “secondary exploitation.” Marx writes:

That the working-class is also swindled in this form [usury, commerce], and to an enormous extent, is self-evident… This is secondary exploitation, which runs parallel to the primary exploitation taking place in the production process itself. Capital, Volume III, p. 609 

Rasmus explains secondary exploitation this way: “Secondary Exploitation (SE) is not a question of value being created in exchange relations. It’s about capitalists reclaiming part of what they paid initially in wages. It’s about how capitalists maximize Total Exploitation by manipulating exchange relations as well as production relations.” 

To be clear, Marx is not using the technical sense of “exploitation” here, but the popular sense. However, the fact that the worker has “earned” a measure of value and that capitalists can wrest some of it away in various ways is exploitation and important and worthy of study. 

Here, however, Rasmus digresses, reverting back to the price form in his explanation of secondary exploitation. He seems to assume, without elaboration, that systemic “taking advantage of workers” outside of the production process must be explained in terms of prices and not values. He also seems to believe that all means of secondary exploitation must be within the exchange nexus. And he seems to believe that all secondary exploitation must be systemic. It is not clear why these assumptions should be made.

These methodological questions, however, bear little relevance to his fresh and original insights on secondary exploitation. Rasmus presents five mechanisms for capital to “claw back” from the working people the variable capital captured by the class in the value-producing process: credit, monopolistic price gouging, wage theft, deferred or social wages, and taxes. Importantly, Rasmus connects much of this exploitation to the active intervention of the state on behalf of capital.

Credit: Allowing workers to acquire commodities through deferred payment is not a sympathetic act by the capitalist, but a method of furthering accumulation in an environment where demand is restricted by the inequalities of income and wealth. The capitalist extracts additional value from the worker through interest charges. Additional value is “swindled” from the worker through the credit mechanism. Rasmus points out that interest-bearing loans to working people have expanded from $10 trillion-plus in 2013 to $17 trillion-plus in 2024, with dramatically higher interest rates in the last few years.

Monopolistic price gouging: Rasmus is fully aware that when prices go up, they are the result of decisions by capitalists to secure more revenue-- that action is not to benefit society, not to help the workers, but to secure more for investors. Insofar as they succeed, their gains are at the expense of workers-- a form of secondary exploitation.

Our current run of inflation is the result of a cycle of price increases to capture more of the consumers’ (in the end, the workers’) value and to catch up with competitors. But the impression must not be left unchallenged that this price gouging is painlessly left to the capitalist at his or her whim or that it is without risk. The impression must not be left, as it was in the 1960s with Sweezy/Baran, Gillman, and others, that monopoly concentration meant a sharp decline in the power of competition to retard and even thwart monopoly power to do as it liked. That lesson was sharply brought home in the 1970s with humbling of the US big three automakers and the US electronics industry. Monopoly and competition play a dialectical role in disciplining price behavior around labor values.

Wage theft: While theft is not exploitation, when it is common, frequent, and rarely sanctioned, it resembles exploitation more than theft! Rasmus provides an impressible list of common ruses-- “The methods [of wage theft] have included capitalists not paying the required minimum wage; not paying overtime wage rates as provided in Federal and state laws; not paying workers for the actual hours they work; paying them by the day or job instead of by the hour; forcing workers to pay their managers for a job; supervisors stealing workers’ cash tips; making illegal deductions from workers’ paychecks; deducting their pay for breaks they didn’t take or for damages to company goods; supervisors arranging pay ‘kickbacks’ for themselves from workers’ pay; firing workers and not paying them for their last day worked; failing to give proper 60-day notice of a plant closing and then not paying workers as required by law; denying workers access to guaranteed benefits like workers’ compensation when injured; refusing to make contributions to pension and health plans on behalf of workers and then pocketing the savings; and, not least, general payroll fraud.”

Deferred or Social wages: Rasmus shows how the government mechanisms that are meant to socially meet needs are skewed to draw more from workers proportionally while benefiting them less proportionally. He has in mind retirement, health care, and welfare programs that politicians persistently demand more sacrifices from working people to fund, while restricting their ability to draw the benefits through various tests of eligibility.

Taxes: Rasmus reminds us that the dominant political forces espousing the “Neoliberal policy regime” have dramatically increased the tax burden on workers:

Since the advent of Neoliberalism, the total tax burden has shifted from capitalists, their corporations, businesses, and investors to working class families.

In the post-World War II era the payroll tax has more than doubled as a share of total federal tax revenues, to around 45% by 2020. During the same period, the share of taxes paid by corporations has fallen from more than 20% to less than 10%. The federal individual income tax as a percent of total federal government revenues has remained around 40-45%. However, within that 40-45%, another shift in the burden has been occurring—from capital incomes to earned wage incomes…

Not just Trump, but every president since 2001 the US capitalist State has been engaged in a massive tax cutting program mostly benefiting capital incomes. The total tax cuts have amounted to at least $17 trillion since 2001: Starting with George W. Bush’s 2001-03 tax cuts which cut taxes $3.8 trillion (80% of which accrued to Capital incomes), through Obama’s 2009 tax cuts and his extension of Bush’s cuts in 2008 for another two years and again for another 10 years in 2013 (all of which cost another $6 trillion), through Trump’s massive 2017 tax cuts that cost $4.5 trillion, and Biden’s 2021-22 tax legislation that added another $2 trillion at minimum—the US Capitalist state has reduced taxes by at least $17 trillion!

Reducing capital’s taxes, as a proportion of tax revenue, increases future national obligations-- national debt-- that will ultimately be paid by working-class taxes. Or, if that proves unfeasible, it will be met by a reduction of social spending, which reduces social benefits for workers. Either way, the working class faces secondary exploitation through ruling-class tax policy.

Interestingly, Rasmus acknowledges that the state plays a big role in what he deems “secondary exploitation.” Yet, he also suggests that the proper province of secondary exploitation is in the bounds of exchange relations. This seeming anomaly can be avoided if we understand the increasing role of the state in engaging, broadly speaking, in the arena of exchange, as well as regulation. It is precisely this profound and broad engagement that many twentieth-century Marxists explained as state-monopoly capitalism.

*****

Jack Rasmus’s contribution is most welcome because it argues that returning to the fundamentals-- the concept of exploitation-- can be a fruitful way of looking at contemporary capitalism. It establishes a firm material base for an anti-capitalist politics that addresses the interests of working people as a class, the broadest of classes. 

Further, the theory of exploitation unites people as workers, but allows for the various ways and degrees of their exploitation. And it links the material interests of the protagonists in the class struggle to the many forms of social oppression and their contradictory interests in promoting or ending those oppressions: the capitalist sows oppressive divisions to gain exploitative advantage; the worker disavows oppressive divisions to achieve the unity necessary to defeat exploitation. That is, exploitation motivates the capitalist to divide people around nationality, race, sex, culture, social practices, and language. Ending exploitation motivates the worker to refuse these divisions.

In an age where capitalism owns a decided, powerful advantage because of the splintering of the left into numerous causes and where capitalism elevates individual identity to a place superseding class, the common goal of eliminating exploitation is a powerful unifying force.

Today’s left has too often interpreted anti-imperialism as simply the struggle for national sovereignty, rather than through the lens of exploitation. Consequently, the dynamics of class struggle within national borders is often missed. 

Of course, for Lenin and his followers, an advanced stage of capitalism-- monopoly capitalism-- was the life form of imperialism. And its beating heart was exploitation.

The vital tool that Marx, Engels, and Lenin brought to the struggle for workers’ emancipation was the theory of exploitation. 

Greg Godels

zzsblogml@gmail.com