Uneven development, unequal exchange and free trade: what implications for labour?

The notion of uneven and combined development has attracted increased academic and activist attention. The concept of unequal exchange, in turn, has been established for some time. What has not been analysed is how these sets of capitalist dynamics intersect. In a new article in the journal Globalizations, entitled ‘Uneven and combined development and unequal exchange: the second wind of neoliberal ‘free trade’?’, Adam David Morton and I analyse the way in which current neoliberal ‘free trade’ policies are related to these fundamental capitalist dynamics, deepening further processes of uneven and combined development as well as unequal exchange. We also highlight the implications for labour as a result of the widening uneven and combined development of neoliberalism.

A general point to start with, following Rosa Luxemburg, is that capitalism’s outward dynamic seeks to secure new growth points of accumulation to overcome internal crises. These crises, she argued, cannot be resolved within capitalism itself but are offset by opening up new markets elsewhere. In other words, capitalism depends on the constant possibility of outward expansion into non-capitalist spaces (see also Spaces of Capital and Rosa Luxemburg).

Further, it was Leon Trotsky who introduced the notion of uneven and combined development in his book Results and Prospects in 1906, when analysing the particular location of Russia within the world economy. While Russia was economically ‘backward’, indicating the unevenness of development in relation to advanced Western countries, a number of small pockets of highly developed industries – especially in military-related production, were established as a result of foreign pressures from more ‘advanced’ West competitor states. Hence, capitalist expansion is also ‘combined’ as a result of the external pressures of capitalist development on less developed countries. In short, in response to the crisis tendencies of capitalism, there is an inherent dynamic of outward expansion along uneven and combined developmental processes.

In more recent times, Samir Amin, director of the Third World Forum, has distinguished two different periods related to the outward expansion of capital. These capture two different processes linked to how peripheral spaces have been repeatedly integrated within global capitalism. Initial efforts to offset the tendency of the rate of profit to fall have revolved around:

1) enlarging markets and exploiting new regions where the rate of surplus value was higher than at the centre; and

2) reducing the cost of labour power and of constant capital.

The fresh geographical extension of capitalism’s domain over peripheral spaces is then established through the mechanism of primitive accumulation. As Amin puts in his book Unequal Development: An Essay on the Social Formations of Peripheral Capitalism, published by Monthly Review Press:

‘The characteristic feature of primitive accumulation, in contrast to normal expanded reproduction, is unequal exchange, that is, the exchange of products whose prices of production, in the Marxist sense, are unequal’.

Since the post-1945 age of monopoly capitalism, expanded reproduction has been secured not simply by integrating non-capitalist spaces, but through restructuring the way in which peripheral spaces are integrated within the global political economy. Amin describes this period as the ‘second wind’ of uneven and combined development. Through the export of capital, forms of production have been established in peripheral spaces, enjoying the advantage of low-wage costs. As a result, peripheral spaces have not only exported primary products from extractive industries or agriculture, but increasingly also manufactured goods. These goods, however, are predominately characterised by low, outdated technological inputs and cheap labour. Hence it is the difference in productivity levels, in which high-valued added goods produced in the core are exchanged for goods based on more living labour inputs from the periphery, which is the key to unequal exchange. This ultimately further deepens the inequalities between ‘core’ and ‘peripheral’ capitalist spaces. 

In sum, the continuity and intensification of different productivity rates between developed and developing countries and, thereby, unequal exchange, is ensured through the ‘second wind’ of uneven and combined development.

Free trade has been a key aspect in the uneven and combined development of capitalism, especially since the dominance of Britain in the 19^th century, when ‘free trade’ was enforced across the world. In contrast to the liberal assumption that all states would ultimately reach the same level of development, as long as they concentrated on their comparative advantage, advanced capitalist spaces have benefitted disproportionally from free trade entrenching uneven development. Thus, it can be concluded that 1) capitalism in its ‘free trade’ form in itself is a cause of uneven and combined development; and 2) capitalist free trade, in causing uneven and combined development, locks states into further relations of unequal exchange.

by Alejandra H. Covarrubias

Since the completion of the GATT Uruguay Round in 1993, the global ‘free trade’ regime has been fundamentally transformed. While the post-war ‘free trade’ regime of GATT was part of the compromise of ‘embedded liberalism, which combined an openness to the international economy with states withholding the right to ensure domestic stability in their own economies, the regime governed by the newly established World Trade Organisation (WTO) has significantly undermined national sovereignty through its dispute settlement mechanism. Moreover, the ‘free trade’ agenda was expanded from its focus on facilitating trade in goods through lowering tariff barriers to new areas including the trade in services, public procurement, investment and intellectual property rights.

By opening up peripheral spaces to high productivity service corporations, some form of ‘development’ will result but the question to pose is for whom? as the old problem of combining elements of ‘advanced’ technological progress with the lagging effects of older ‘backward’ elements remains. As a result, processes of uneven and combined development are further extended while peripheral capitalist spaces become locked into new relationships of unequal exchange. Peripheral capitalist spaces are yet again transformed in the latest extension of capitalist relations of production through the ‘second wind’ of ‘free trade’.

In short, ‘free trade’ has always played an important role in the outward expansion of capitalism. Initially, non-capitalist spaces provided new markets to absorb surplus goods from centres of ‘advanced’ capitalism. During the second phase, GATT negotiations facilitated further trade in manufactured goods. It is, however, the most recent period, in which the ‘free trade’ agenda has expanded, reaching into areas of financial investment and service provision, thereby adopting its most significant role.

This situation heralds perhaps a new, third period reconstituting the relationships of unequal exchange between spaces of the global political economy as a result of continuing and intensified uneven and combined development. It is these dynamics around the expanded free trade agenda, which Ray Kiely in his book Rethinking Imperialism refers to as a new phase of neoliberal, free trade imperialism.

The implications for labour and its potential agency of resistance against further restructuring are complex. Precisely because capitalist expansion has been uneven, labour movements in different state spaces find themselves in contrasting locations within the global political economy. Thus, while some labour movements may feel that further capitalist expansion is in their interest and albeit only at first sight, others realise the detrimental impact the expanded ‘free trade’ agenda implies.

When Trotsky analysed the way Russia was integrated into the global political economy through processes of uneven and combined development at the beginning of the twentieth century, he wanted to understand the structural preconditions of the Russian situation and in what way it may facilitate revolutionary upheaval. The element of combined development is crucial in this respect, since it brings together the most ‘advanced’ social forms with ‘backward’ social forms, resulting in unstable state spaces, forming an explosive situation. Peripheral spaces, therefore, are potentially a fertile ground for revolutionary uprisings. The increasing numbers of labour strikes in China and the collective power of opposition forces in public spaces such as Tahrir Square in Cairo, Syntagma Square in Athens and Taksim Square in Istanbul are testimony to such an understanding of the situation.



Adam David Morton is Professor of Political Economy at Sydney University/Australia.

Andreas Bieler is Professor of Political Economy at Nottingham University/UK.