One for the hive mind

[Young Master Smeet]

https://www.nature.com/articles/s41467-024-49687-y

“Researchers have argued that wealthy nations rely on a large net appropriation of labour and resources from the rest of the world through unequal exchange in international trade and global commodity chains. Here we assess this empirically by measuring flows of embodied labour in the world economy from 1995–2021, accounting for skill levels, sectors and wages. We find that, in 2021, the economies of the global North net-appropriated 826 billion hours of embodied labour from the global South, across all skill levels and sectors. The wage value of this net-appropriated labour was equivalent to €16.9 trillion in Northern prices, accounting for skill level. This appropriation roughly doubles the labour that is available for Northern consumption but drains the South of productive capacity that could be used instead for local human needs and development. Unequal exchange is understood to be driven in part by systematic wage inequalities. We find Southern wages are 87–95% lower than Northern wages for work of equal skill. While Southern workers contribute 90% of the labour that powers the world economy, they receive only 21% of global income.”

They argue that unequal exchange is the key, which, I suspect would be contrary to our understanding (control of capital, international financial and transport infrastructure, etc. would I think come higher up our list).

Of interest is their claim: “The unequal exchange of labour described above is not explained by sectoral differences.” and “We find that this pattern of net appropriation plays a major role in the North’s consumption (Fig. 5). In any given year, the North consumes roughly twice as much labour as it renders, thanks to appropriation through unequal exchange.”

Key is: “it is clear that the North’s development model cannot be universalised, as it relies on appropriation from elsewhere. Furthermore, it is unlikely that the North’s current levels of aggregate consumption could be maintained under fair trade conditions. To maintain current consumption, Northern populations would need to substantially increase their working hours (while also committing substantially more domestic land, materials and energy to production), which would be socially and politically difficult to achieve.” which lands squarely on our claims as to what would happen under world socialism.

Finally, a useful finding: “We find that, globally, labour received, on average, 51.6% of world GDP during the 5-year period 2017–2021. In other words, only half of all value produced in the world economy (that is represented in prices and included in GDP accounts) is captured by workers in the form of wages. As Fig. 9 shows, this represents a decline from the late 1990s (1995–1999), when labour’s share of GDP averaged 54.7%. This suggests that labour’s position vis-à-vis capital has deteriorated over the period analysed.”

I think this would be worth reading, and I need to find the time to commit to looking at it in detail: some issues that occur to me, how is north and south defined, and what do they mean by unequal exchange.

[ALB]

There is a possible alternative explanation for the facts unveiled to “unequal exchange” (which implies that “the South” is not being paid a fair price for what it sells up the supply chain).

It’s the theory that the whole world is a “planetary factory” in which the world working class produces, as a class, a pool of surplus value which firms and states compete to grab as much as they can. The firms and states of “the North” do better in this, channelling to themselves a disproportionate amount via interest on loans, charges for financial and legal services, patents and other “intellectual property” rights.

[Young Master Smeet]

Yes, so, for example, they state: “core states and firms leverage their geopolitical and commercial power to compress wages, prices and profits in the global South, both at the level of national economies as well as within global commodity chains (which account for more than 70% of trade), such that Southern prices are systematically lower relative to Northern prices13,14. Price inequalities compel Southern states and producers to export more labour and resources embodied in traded goods to the global North each year in order to pay for any given level of imports, enabling Northern economies to net-appropriate value to the benefit of Northern capital and consumers.”

Also, I think they leave out Varoufakis’ global minotaur here: owners elites in the global south export their capital back to the core, rather than investing locally, so the global pool of capital, although housed in the core in fact represents all capitalists.

And: “structural adjustment programmes (SAPs)[…] devalued Southern currencies, cut public employment and removed labour and environmental protections, imposing downward pressure on wages and prices. They also curtailed industrial policy and state-led investment in technological development and compelled Southern governments to prioritise ‘export-oriented’ production in highly competitive sectors and in subordinate positions within global commodity chains. At the same time, lead firms in the core states have shifted industrial production to the global South to take direct advantage of cheaper wages and production costs, while leveraging their dominance within global commodity chains to squeeze the wages and profits of Southern producers. These interventions have further increased the North’s relative purchasing power over Southern labour and goods.”

On what counts as North/South: “Our category for the global North approximates the IMF list of ‘advanced economies’, with the South comprising all emerging and developing economies”

This from the tables is interesting:

Across the global North in 1995 hours worked per worker was 1895 in 1995 but 1770 in 2021 whereas in the South it was 2216 and 2236: it seems the growth in Southern labour has been extensive rather than intensive, but the case remains that there seems to be a greater level of exploitation.

[Young Master Smeet]

Sorry, just saw this para:
“Our results also indicate that the global South is drained of a large quantity of productive capacity through unequal exchange (9–16% of its total productive capacity, in terms of labour, is drained in any given year). 826 billion hours of labour in 2021 is equivalent to 369 million workers (assuming 2236 h per worker per year, which is the global South average as presented in Table 1). This is more than the total workforce of the United States and the European Union combined. This quantity of labour could be mobilised to produce housing and nutritious food for communities within the global South, or to build and staff hospitals and schools, thus provisioning for local human needs and achieving necessary development objectives; but instead—because of the squeezing of Southern labour and producers, and because of constraints on the ability of Southern states to develop greater economic sovereignty—it is appropriated to produce within global supply chains that service Northern growth, consumption and accumulation.”

This is key, and is essentially our position, that freed from capitalist distortions, we could develop the world rapidly. Interesting to see it quantified, though.

[Author]

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