[Marxism] What is wrong with the ISO's and the US SWP's positionson Cuba

[Joaquin Bustelo]

David McDonald:

"Could you mention where in Volume III of Capital Marx discusses unequal
exchange? Thanks."

http://www.marxists.org/archive/marx/works/1894-c3/ch14.htm

It is in the subchapter on Foreign Trade.

Capitals invested in foreign trade can yield a higher rate of profit,
because, in the first place, there is competition with commodities produced
in other countries with inferior production facilities, so that the more
advanced country sells its goods above their value even though cheaper than
the competing countries. In so far as the labour of the more advanced
country is here realised as labour of a higher specific weight, the rate of
profit rises, because labour which has not been paid as being of a higher
quality is sold as such. The same may obtain in relation to the country, to
which commodities are exported and to that from which commodities are
imported; namely, the latter may offer more materialised labour in kind than
it receives, and yet thereby receive commodities cheaper than it could
produce them. Just as a manufacturer who employs a new invention before it
becomes generally used, undersells his competitors and yet sells his
commodity above its individual value, that is, realises the specifically
higher productiveness of the labour he employs as surplus-labour. He thus
secures a surplus-profit. As concerns capitals invested in colonies, etc.,
on the other hand, they may yield higher rates of profit for the simple
reason that the rate of profit is higher there due to backward development,
and likewise the exploitation of labour, because of the use of slaves,
coolies, etc. Why should not these higher rates of profit, realised by
capitals invested in certain lines and sent home by them, enter into the
equalisation of the general rate of profit and thus tend, pro tanto, to
raise it, unless it is the monopolies that stand in the way. [1] There is so
much less reason for it, since these spheres of investment of capital are
subject to the laws of free competition. What Ricardo fancies is mainly
this: with the higher prices realised abroad commodities are bought there in
return and sent home. These commodities are thus sold on the home market,
which fact can at best be but a temporary extra disadvantage of these
favoured spheres of production over others. This illusion falls away as soon
as it is divested of its money-form. The favoured country recovers more
labour in exchange for less labour, although this difference, this excess is
pocketed, as in any exchange between labour and capital, by a certain class.
Since the rate of profit is higher, therefore, because it is generally
higher in a colonial country, it may, provided natural conditions are
favourable, go hand in hand with low commodity-prices. A levelling takes
place but not a levelling to the old level, as Ricardo feels.

See also the discussion in this article by Mandel:

http://www.marxists.org/archive/mandel/1964/xx/afterimp.html

But all this does not answer the question. Or rather, when Barratt Brown
infers from it that 'the wealth of rich lands such as Britain has not been a
function of the poverty of poor lands', -i.e. when he eliminates the
category of exploitation from his analysis of international economic
relations in the 19th and early 20th century - he overstates his case. For
if he is basically right in saying that the wealth of British capitalism was
rooted in trade (exports) and not in foreign capital investment, then it is
precisely this trade which was the main form of exploitation of the
underdeveloped countries by the developed ones.

What Barratt Brown misses in his analysis is Marx's whole explanation of
international trade as often an exchange of unequal quantities of labour:
less (skilled and intensive) labour of highly productive countries against
more (skilled and less intensive) labour of backward countries.

Marx's theory of international trade is a variation of Ricardo's theory of
comparative costs, perfected by a better understanding and application of
the labour theory of value. [4] Under capitalism, there is no international
equalization of the rate of profit, given a high degree of international
immobility of capital and labour. But there is the creation of a world
market with single prices for many commodities. How will these prices be
established? By averages between the production prices of the advanced
countries and production prices of the backward countries (Marx calls these
'average utilities of universal labour'). As long as the world level of
industrialization does not prevent this, prices of exported manufactured
goods, will be above the production price in the advanced capitalist
countries (i.e. will fetch the exporter a surplus-profit over and above the
average profit he enjoys on his home market) and prices of imported primary
goods will be below the production price of these same goods in the advanced
countries (i.e. will cheapen the cost of constant capital, and enable a
reduction - or a lesser increase- in nominal wages). Of course, as these
export prices of manufactured goods will still be lower than the production
prices inside the underdeveloped countries, and as these import prices of
primary goods will still be higher than what their owners could fetch for
them on their under-developed home market, the backward countries have an
immediate interest in specializing in this form of international division of
labour - at least from a capitalist point of view.

In this way, by maintaining a roughly speaking three scales of value - in
the advanced countries; in the backward countries; and on the world market -
an international division of labour which confines the backward countries to
output of primary products is created. Barratt Brown rightly underlines that
this division of labour has no 'natural' origin whatever, but is the result
of a deliberate policy by the imperialist powers, which enables the
industrialized countries to enrich themselves through trade and to
counteract their falling rate of profit. Trade between industrialized and
underdeveloped countries at 'world market prices' is not based on an equal
exchange of value, but on a constant transfer of value (surplus profit) from
the underdeveloped to the industrial countries, exactly in the same way as
exchanges between firms some of which enjoy monopolies of technical know-how
(and so produce at a level of productivity above the national average)
transfer surplus profits to those firms on the national market of a
capitalist country.

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Joaquin