Unequal Exchange: Theory and Measurement

Abstract

<p> This thesis examines the theory of unequal exchange - an application of the labour theory of value to international freetrade - arguing that increased trade will harm rather than improve economic and social disparities between the developed and Third World countries. The theory as put forward by Arghiri Emmanuel is first presented and criticised. Assumptions of capital mobility and labour mobility on a world scale are than examined. As a result of these analyses unequal exchange is found to be a process the magnitude of which is mediated by the historical development of technology and the increasing mobility of productive capital. Unequal exchange does not provide a monocausal explanation of uneven development in capitalism as dependency-like interpretations would suggest, though it does make a significant contribution to a multicausal explanation. </p> <p>The existence of unequal exchange is shown, and its magnitude measured'i""' empirically on the basis of Morishima's value system. Input-output accounts for Canada and the Philippines are used for 1961 to produce estimates of commodity values per dollar. It is found that exports from the Philippines sold at prices that were almost five times lower than exports from Canada of the same value. Unequal exchange therefore, is a significant counteracting influence to the tendency for the rate of profit to fall in developed sectors, reducing the rate of profit, and therefore the rate of accumulation, in less developed sectors of production. </p> <p> The results of this analysis provide for two policy suggestions. Firstly the need to extend the class struggle to an international scale. Secondly, whilst import substitution may not solve the problems of less developed countries, an increase in trade will only harm them further. </p>