The purpose of this blog is to provide analytical commentary on formal and informal labour organisations and their attempts to resist ever more brutal forms of exploitation in today’s neo-liberal, global capitalism.

Sunday, 13 November 2016

Imperialism in the Twenty-First Century

Despite the ongoing ramifications of the global economic crisis of 2007/2008, capitalism continues to reap super profits. In his fascinating book Imperialism in the Twenty-First Century: Globalization, Super-Exploitation and Capitalism’s Final Crisis (Monthly Review Press, 2016) John Smith unravels the underlying dynamics of global capitalism. By tracing the production of the T-shirt, the cup of coffee, and the iPhone, he demonstrates how these generate the transfer of enormous surplus value from countries in the Global South to transnational corporations in the North. In this blog post, I will outline several of the key contributions of this book and offer a number of critical reflections.  

The centrality of Global Labour Arbitrage

In his detailed analysis, Smith indicates clearly how bourgeois, mainstream economics hides the exploitation of workers in the Global South underpinning super profits in the Global North. ‘The flow of wealth from Chinese and other low-wage workers sustaining the profits and prosperity of Northern firms and nations is rendered invisible in economic data and in the brains of the economists’ (P.22). The way production has become transnationalised across borders and organised in so-called Global Value Chains is at the heart of the transfer of wealth from the Global South to the North, the organisation of exploitation of labour by capital on a global scale.

It is Global Labour Arbitrage, ‘the substitution of relatively high-wage workers in imperialist countries with low-wage workers in China, Bangladesh, and other nations in the Global South’ (P.188), Smith argues, which has allowed capital to continue reaping super profits since the major economic crisis of the 1970s. In line with the Marxist labour theory of value, only living labour can generate surplus value and this role is now increasingly performed by living labour in the Global South.

Conditions of super-exploitation in the Global South

In Capital, Marx identified three ways of how capital can intensify exploitation in order to increase surplus value, profits. First, it can focus on absolute surplus value through extending, for example, the length of the working day. Second, it can focus on relative surplus value by introducing new technology into the production process and thereby increasing labour productivity. Finally, capital can reduce wages below the value of labour-power, i.e. below the level which workers need in order to ensure their own re-production. It is Smith’s major contribution to discuss this third way of increasing surplus value, something which Marx identified but never developed in detail himself (P.197).

Against the background of a vast supply of cheap labour in the Global South, the rates of exploitation of workers in the North and South differ, with wages in the latter being below the value of labour-power. ‘Global labor arbitrage-driven outsourcing is driven by lust for cheaper labor, and corresponds most directly to the “reduction of wages below their value”’ (PP.238-9). In short, the attraction of labour in the Global South is not only that it is cheap labour, but it is also the possibility of a higher rate of exploitation of these workers. ‘Global labor arbitrage is the form taken by the third form of surplus-value increase’ (P.249). 

Critical reflections I: Productive versus unproductive labour.

In his analysis of global labour arbitrage and how value is transferred from the Global South to the North in this process, Smith emphasises the importance of the distinction between productive and unproductive labour. It is only the former, workers employed in sectors producing concrete goods, who can create value. Workers employed in services related to the selling of goods on the market cannot. ‘The more that social labor is employed non-productively, in commerce, finance, security, legal services, etc. – exactly what has been happening on an accelerated scale in the imperialist economies during the neoliberal era – the greater the downward pressure on profits and the greater the imperative to compensate for this by intensifying the exploitation of productively employed workers’ (PP.63-64).

Hence, it is productive labour in the Global South, which produces the value consumed by non-productive labour in the North. ‘This growing asymmetry therefore implies that a significant and growing proportion of value consumed in non-productive activities in imperialist countries was generated in low-wage countries, and that Northern capitals operating in nonproduction sectors are valorized in part by the living labor expended in Southern production activities’ (P.272).

From a focus on class struggle and resistance, however, it is dangerous to pit productive against unproductive labour. Workers in the service industry as well as non-wage labour in the household, and thus non-productive labour, are equally important for the capitalist social relations of production and workers’ ability to reproduce themselves. They are equally subjected to increasing levels of exploitation. When thinking about the capitalist social relations as a whole, it is, therefore, in my view more useful to think in terms of a ‘social factory’ as discussed by Harry Cleaver, which encompasses productive and non-productive wage labour as well as non-wage labour (Cleaver 1979/2000). Going beyond struggles at the workplace is essential, when assessing the possibilities of resistance against exploitation.

The ‘social factory’ also becomes important when analysing the ways of how the wages of Chinese workers, for example, are driven below the level workers require for their own reproduction. Smith suggests in the book that rising unemployment alone, ‘even before we take into account the much harsher labor regimes and political repression prevalent in low-wage countries, exerts a powerful force that makes the price of their labor-power fall below its value’ (P.237). Nevertheless, on its own this explanation is not satisfactory, as it would imply that workers would not be able to survive. A focus on the ‘social factory’ can reveal how migrant workers’ continuing access to land back home is part of their social re-production, making up for missing wages.

Critical reflections II: The role of free trade

In his focus on global labour arbitrage, Smith underestimates the importance of ‘free trade’ for imperialism in the 21st century. He does acknowledge ‘free trade’ as a factor of how surplus is transferred from the Global South to the North, when labour-intensive goods are exchanged with capital-intensive goods. ‘Workers in firms employing more advanced technology do not themselves produce any more value in a given period of time than workers employed by more backward firms, but the higher productivity of workers in the former does allow their employer to capture part of the surplus value generated in the latter’ (PP.244-5).

Nevertheless, he overlooks the importance of ‘free trade’ for the maintenance of global labour arbitrage in the first place. Transnational production organised in global value chains across borders can only function properly and smoothly, if it is easy to move parts and finished products easily from one country to the next. Any disruption to ‘free trade’ would endanger transnational production networks and, thus, global labour arbitrage. It is for this reason, why the current negotiations of an expanded ‘free trade’ regime reflected in the Transpacific Partnership Agreement (TPA) and the Transatlantic Trade and Investment Partership (TTIP) are so crucial for capital (Bieler 2015). It extends ‘free trade’ into new areas as well as assures the functioning of transnational production. This is why Ray Kiely refers to the current global order as ‘free trade imperialism’ (Kiely 2010: 7).

Critical reflections III: All roads lead into crisis and the role of agency

In the final chapter of the book, Smith reflects on the unsustainability of the rising debt levels of emerging markets. ‘According to a study by McKinsey, total emerging market debt rose to $49 trillion at the end of 2013, accounting for 47 percent of the growth in global debt since 2007’ (P.308). All roads lead into a final, inevitable crisis of capitalism and the only alternatives are socialism or nothing. However, what about agency of resistance? Overall, Smith’s narrative takes on a rather structuralist account of capitalist development and final demise with agency of resistance being only briefly discussed in the last three pages of the book.

Of course, capitalism is crisis ridden and one crisis follows upon another. Nevertheless, capitalism has also proven itself to be more robust in finding ways out of crisis than expected by many. This is why a focus on agency and its possibilities to resist exploitation and transform capitalism towards socialism is so essential. Smith lays the foundation for an analysis of agency through his masterful examination of the structuring conditions of global capitalism, but potential forces of resistance still need to be explored elsewhere.  

Overall, however, my critical reflections should not distract from the major achievement of this study. Rich in empirical detail, it provides excellent insights into capitalist exploitation on a global scale in the 21st century. A must read for everyone interested in understanding the workings of global capitalism.  

Andreas Bieler

Professor of Political Economy
University of Nottingham/UK
Personal website:

13 November 2016

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